What is Investment Planning?

An Investment means keeping aside money today, to get a higher return in the future. Investment planning needs to be done based on the risk you are able to handle. If you are risk averse you must invest in fixed income securities. The money you invest is safe and you get interest on it. You can invest in equity if you like to take risks in your investments. You can invest your money in shares or equity mutual funds to get higher returns, if you are a risk aggressive investor.

These are some of the financial instruments you would consider:

  • Public Provident Fund
  • 5 year bank Fixed Deposits
  • National Savings Certificate
  • Senior citizens savings scheme
  • Post office monthly income scheme

Why Invest Planning?

Your Emergency Fund

It helps you increase your money which you can set aside for an emergency. You don’t need to borrow money to pay the medical bill.

Meet Financial Goals

You can meet financial goals such as holidaying abroad, buying a car or even setting aside money for retirement.

Increase Your Wealth

If you want to become rich, just saving money is not enough. You need to invest. Investing helps you gain the benefits of compounding.

Tax Benefits

If you invest in equity linked saving schemes a type of equity mutual fund, you get tax benefits on your investment.


Key factors to consider for Investment Planning

If you are an aggressive investor you would invest in

Equity Linked Savings Scheme (ELSS):

  • If you are willing to bear a very high risk for a very high return, then you must consider an investment in ELSS.
  • It gives you a high return of around 10-12% if the stock markets do well but can also result in severe losses if the market crashes.
  • You also enjoy a tax deduction under Section 80C, up to INR 1.5 lakhs on the money invested in the ELSS.
  • ELSS also enjoys “EEE” status which means the money invested in the ELSS. The money accumulated with time and the maturity amount (withdrawn after 3 years) is free of tax. Since you are forced to invest in the ELSS for at least 3 years you are a long term investor and can get good profits.
  • You could invest in a Systematic Investment Plan (SIP) of an equity mutual fund
  • In a SIP a fixed sum of money is deducted each month from your bank account and invested in an equity mutual fund scheme of your choice, on a particular day of the month. Your money is managed by a Professional Fund Manager. You do not need to time the market. You just spend time in the market.

You could invest in a Systematic Investment Plan (SIP) of an equity mutual fund

Equity Linked Savings Scheme (ELSS):

  • In a SIP a fixed sum of money is deducted each month from your bank account and invested in an equity mutual fund scheme of your choice, on a particular day of the month. Your money is managed by a Professional Fund Manager. You do not need to time the market. You just spend time in the market.