Basics of Investment Planning that can help you meet your financial goals

Basics of Investment Planning that can help you meet your financial goals

The fundamental principle of investment is – it must be planned. There are various products available for investment, we group them into asset classes. There are several examples of asset classes and sub-asset classes, such as:


  • Equity
  • Preference

2. Debts

  • Government Securities
  • Bonds & Debentures
  • Term Deposits
  • Small Savings Schemes
  • Money Market Instruments

3. Precious metals

  • Gold
  • Silver

4. Infrastructure & Real Estate

5. Alternative Assets

  • Art

For small investors, there are some easier vehicles designed for investment. For example-

6. Mutual Funds

  • Equity MF
  • Debt MF
  • Money Market MF
  • Balanced MF

7. Infrastructure Investment Trusts

8. Real Estate Investment Trusts

  • Equity REIT
  • Mortgage REIT

When there are so many options to choose from, how can one go about it? The easiest way is to go for a Mutual Fund, where you share their cost and they appoint a fund manager to the job for you. But again, what kind of a mutual fund to select from so many options?

The answers to the above questions require some homework.

The basic step is to know your risk profile. There is a theory called ‘Risk & Return Trade off’. The more risk you take, the more return you get, either in the positive direction or in the negative. Your risk appetite tells you how much shock you can absorb when your return turns negative.  

Your risk profile is the solution to know your expected return. When you know how much return you should expect from your portfolio, you diversify it across various asset classes and hedge your risk. The key is – not to put all the eggs in one basket. 

When you invest some money, you should set your goal. This involves thinking about the purpose of your investment and the timeline left to achieve the goal. Your objective will decide whether you require capital appreciation or regular income from your investment. If you need capital appreciation in the long term, you can choose an option like equity. If your objective is regular income, debt would be your solution. If you have a short term requirement or you need to protect your capital, you should compromise your expected return and go for a safer option like Government Securities or Gilt.  

If you need to know more about how to plan your investment, you can contact us – Click Here

If you too have a question, share it in the comments below or DM us or call us – +91 9051052222. We’ll be happy to answer it. 

Aditi Nundy

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