Investment planning, also known as strategic investment planning, is one method of investment management in which a company, organization or a whole group of investors (all known as the investment managers) set aside a fixed amount of money to be used for making investments. A systematic investment strategy is an investment vehicle provided by several mutual funds so that investors can invest small amounts periodically rather than lump-sum amounts. The regularity of such investment is generally weekly, bi-weekly or monthly. This strategy is not designed for large quantities of money, but rather for a relatively small amount of money that is invested regularly. An example of a regular structured investment plan would be the funds managed by a pension fund.
Investment planning differs from other financial planning methods in that it involves setting and achieving specific financial goals and objectives. It is used to set and achieve specific monetary or financial objectives of a long-term nature. The financial goals are generally long-term ones such as retirement or even a buildup of wealth for the purchase of a house or other significant investment. Investment planning is a very important tool because it helps you understand your own personal financial resources, as well as those of your family. Understanding these resources and being able to anticipate their growth is the basis for sound investment planning.
Investment planning is a process, not an event. In order for you to be able to understand what your investments are doing on a day to day basis, you need to consult with a qualified financial planner, who has a proven record of setting financial goals and achieving those goals. Your planner will help you develop a formalized financial plan that details the type of investments you will make and the expected returns on those investments over a given time frame. The financial planner will also help you to determine how you will use the funds you have accumulated to reach your goals. Finally, the financial planner will help you protect your investment and further protect your gains through policies such as life insurance and accident insurance.
While you should definitely consult a qualified professional regarding your investments, if you want to be a more hands-on approach when it comes to your investment planning, you may wish to consider investing in a more low-risk vehicle such as the stock market. A low-risk vehicle is one in which the chances of losing your money are low, yet your potential gains are also high. For example, government bonds offer excellent returns, but you are not required to pay taxes on them until you actually sell them. This tax deferral enables you to delay paying taxes on your gains and allows you to realize more profit sooner. There are also mutual fund investments available that offer excellent returns with minimal risk.
Another important step in investment planning is identifying your short-term and long-term goals. These goals should be written down so you can keep track of your progress toward them. It is also important to set a deadline for reaching your goals. You can do this by writing down your monthly target amount in a weekly or monthly diary. This will help you focus on achieving your goals if you don’t stick with them on an individual level. You can also identify your long-term and short-term goals with the help of a financial planning service.
Finally, once your asset allocation strategy is complete, it is time to rebalance your portfolio. In general, rebalancing is performed once a year. However, it may need to be done more frequently depending on the health of your portfolio and your individual risk tolerance. If your portfolio requires additional adjustments, you may need to consult your investment planning services for advice on when to perform this process.