Heres How To Secure Your Financial Future

Hemant Rustagi
Chief Executive Officer, Wiseinvest Pvt Ltd.

One of the key factors that define the level of investment success you can achieve is your ability to keep investments on track over varied time horizons. The constant changes in the economic scenario and volatile financial markets make it quite a challenging task. Another challenge is to maintain a balance between the risk and reward to bring consistency in the performance of the portfolio. While it is great to see an increasing number of investors managing their investments on their own, the ‘do it yourself” (DIY) strategy can expose them to unwarranted risks if they either don’t have the wherewithal to make sound investment decisions or don’t follow the right investment process. 

Over the years, there has been a proliferation of financial products and a growing amount of information in print, electronic and the digital media. More than ever, you need someone who can guide you through your investment process. Therefore, engaging with an investment expert, who is reliable and has the wherewithal to help you plan your investments, can go a long way in achieving the desired results. The process should begin with developing an investment plan. This will include the recommended asset allocation and various investment options that suit your needs. One of the key processes here would be to align investments to your goals. 

Despite the proven benefits of having a financial plan in place, many investors often undermine its importance. In reality, all individuals and families, regardless of age or income, need one so that they know whether they are saving enough for retirement, children’s education and buying a new house or not. A financial plan gives you the discipline necessary to save money and keep your investments on track. This entire process can help you get the best returns for your risk level by dividing your investments into the different asset classes as well as investment options. 

For example, at the start of your career, a financial plan can bring in discipline into your investment process. Besides, by starting your investment process early, you can benefit a great deal from the ‘power of compounding’. In other words, even by investing a moderate amount every month, you can achieve your goals without too much of stress. Moreover, a financial planner can also help you in rebalancing your portfolio as you near your retirement age or the term of achieving a pre-defined goal. 

As is evident, a disciplined investment process ensures that you would have sufficient financial resources at different stages of your life. An integral part of this disciplined process is creating a multi-step process that provides you with an in-depth review of your current financial situation and a blueprint that shows you how to achieve your goals and objectives. An analysis of your income, expenses, current savings and investments, current insurance policies and estate planning documents and using this information to work out a blueprint to fund your future financial needs for different goals can contribute significantly to a secure financial future.

This process will also ensure that you have realistic expectations in terms of the kind of returns that can be earned on your investments as well as what kind of risk cover would be needed in the form of life and health insurance to protect you and your family. You also get an analysis of your emergency fund, which is the amount of money you must have in the form of investments that can be encashed readily. Your current investments must also be analysed and appropriate changes should be made, if required. Remember, planning for your investments doesn’t have to be an intimidating process. A disciplined approach as well as commitment to time horizon can make it a simple and fruitful process for you.