How to make suitable investment for sound financial future?

Posted by Aravi on June 26th, 2017

To make any form of investment you will have to ask some questions to yourself and patiently work through the answers. Your family’s financial security is very important especially at the time of uncertainties, unexpected recession, economic turmoil, etc.  You have to be prepared with sufficient financial resources so that their goals are not hit upon through these events. For this, you will have to pool your money in the best investment plan to get healthy returns as and when your financial needs arise.

While building an investment plan here are a few questions that need answers which will help you make wiser choices:

Purpose of Investments

Investments should be made by keeping your main financial goal in mind which are safety, income, and growth. The first thing you need to decide is which one of these is important for you. Do you need a current regular source of income or a future source of income or create a financial safety? This will help you take investment decisions easily.

Realistic Set-aside

Many investment choices need to have some money set aside. So before you can lay out a solid investment plan you have to take a call on how much you can invest. Do you have a lump sum to pay towards premium or you will make regular monthly contributions? When you have a larger sum to invest, you can make the best use of your financial resources towards higher returns.

While choosing the best investment plan you have to establish a time frame you can stick too. There would be a financial goal time-on-time basis that will have to be achieved. So, ensure you sit with your financial expert and make a project earning from the funds that you choose. If the funds are not generating enough returns try switching them across to produce money that will fulfill your goals. Experts say, in reality, significant growth typically requires at least 5 years or more time in the market.

Risk appetite

Again, it’s one of the crucial factors while determining your best investment plan. Ideally, experts say you should put aside an emergency fund and then divert the rest of money for investments. One of the easy ways to reduce investments risk is to diversify your resources. By doing so you will still experience swings in investment value, however, it will reduce the risk of a complete loss during bad timings in the markets.

Fund types

It’s extremely crucial to choose your funds and investment ratio carefully. Ideally, investment-cum-insurance plans offered by insurance firms are best investment plans that gives dual benefit of life insurance cover as well as investment earnings from market-based funds.

These funds are equity based, debt funds and balanced funds. Based on your risk appetite and future goals you can choose the fund type. Experts advise to choose an investment plan as early as possible in your younger days. This way you can give your money more exposure to equity based funds. Once you book profits you can move the earnings to secure debt funds.

It's better to lay out a thorough list of all the financial needs. Take time to understand the pros and cons of each. Next, narrow down your financial investment choices to a few that you feel confident about to generate earnings from.