INVESTMENT PLANNING

We all make decisions regarding investment. From pricing items in the grocery store for "good values" to deciding how to invest our retirement funds.

If we are making investment decisions today that will directly affect our future wealth, it would make sense that we utilize a plan to help guide our decisions. Surprisingly, the majority of people do not have in place any type of formalized investment plan. Taking the time to put together a financial plan can reap tremendous benefits.

Meeting your life goals through the proper management of your finances, can include buying a home, saving for your child's education or planning for retirement. Financial planning provides direction and meaning to your financial decisions. It allows you to understand how each financial decision you make affects other areas of your finances. For example, buying a particular investment product might help you pay off your mortgage faster or it might delay your retirement significantly. By viewing each financial decision as part of a whole, you can consider its short and long-term effects on your life goals. You can also adapt more easily to life changes and feel more secure that your goals are on track.

You do not have to be wealthy to be an investor. Investing even a small amount can produce considerable rewards over the long-term, especially if you do it regularly. But you need to decide about how much you want to invest and where . To choose wisely, you need to know the investment options thoroughly and their relative risk exposures.

Investment approaches
The options you choose to put your money in, reflect the investment strategy you are using. Most people adopt the following approaches:

Conserative
These investors take only limited risk by concentrating on secure, fixed-income investments etc.

Moderate
Such Investors take moderate risk by investing in mutual funds, bonds, select bluechip equity shares etc.

Aggressive
These are investors who take major risk on investments in order to have high (above-average) returns like speculative or unpredictable equity shares, etc.

As a matter of fact, the investment approach of an investor is directly linked to his or her ability to shoulder risk. The ability to take risks depends largely on personal circumstances and factors like age, past experiences with investing, level of responsiblility, etc.