Some Pune investors that I meet on a day-to-day basis have common queries like what is a good area to invest in today? Or If I put a certain amount of money how much will get at end of one to three years? Which is the best stock at the moment? What’s the best way to go about financing rental property? And what is a good time to invest?
While the above questions are of fundamental importance of channelising your savings, one must understand that the questions are seriously flawed.
The utilisation of channelising investment is not generic but rather tailor-made and varies on a case-to-case basis after deep understanding of what is the utility of the savings.
A financial planner cannot suggest the same investment to someone who requires to save for buying a car and someone planning to save for retirement . The process is much more in depth. A generic approach of haphazard saving and subsequently trying to align goals from accumulated corpus is a flawed method which will result in a dent in the personal finances. Finances can be a difficult thing to manage which is why some people choose to hire a reputable accountant (such as these Accountants in Windsor). Financial planning is different for every individual but it’s vital to secure a financially stable future.
The following is a step wise approach to understand the financial investment suggestion drafted by wealth advisors –
Step 1 – Complete evaluation of the investor
A complete understanding of the age, family background, job description, sources of income, daily expenses, tax slab, risk taking capacity savings and current investment portfolio is of utmost importance for giving proper advice. The advice cannot be the same for a retired person who wants to invest Rsonelakh and a young salaried class employee who wants to invest Rsonelakh .
Step 2 – Current Financial Situation
Each person’s financial situation is independent of each other. Some people have heavy liabilities in terms of EMI related payments of home loans, car loans, etc. while some are cash rich as they do not have any heavy expenditure requirement on loans but may also have heavy outflow that is supporting their payments. Each investor’s situation is different in the moment. As Stocktrades suggests, individual financial circumstances differ greatly, and as a result, so does the associated portfolio. While certain stocks will work for some, they simply won’t for others especially when you take into account Step 3.
Step 3 – Goals Analysis
Every investment has to be linked to a goal. Generic and haphazard savings cannot help in preserving and compounding wealth. But maybe reading about the time when Property Geek reviewed Assetz Capital here. This may be the information you need, that helps push you forward to leading a better financial life. One must specify the time frame, goals aimed at and risk-taking capacity are amongst the few things for an advisor to give appropriate advice.
For short-term goals within one year, it is always advocated to allocate the capital in liquid or arbitrage funds for capital preservation and tax efficient returns in the form of interest or dividend to help meet goals.
For medium-term goals, one can suggest to go ahead with conservative allocation to balance funds in forms of SIP or lump sum investment to ensure the corpus is accumulated.
For long-term goals, one can always go for pure equity funds in the form of Systematic Investment Planning.
Step 4 – Regular Evaluation of Portfolio
This helps to re-balance the investment portfolio at regular intervals as per latest investment trends and also evaluate new capital allocation to further help the overall portfolio
One must realise that there are various asset classes available for investing – equities, bonds, currency denominated assets, real estate, precious metals like gold, etc. The allocation of savings has to be done in a scientific manner with goal based and risk management principles for optimum results and giving a good investing experience. A fair disclosure with a financial advisor can go a long way to meet goals with less hassles.
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