Financial Planning: A Guide to Allocating Your Investments

Financial planning is an important aspect of human life, helping people set and achieve their long-term financial goals through investments, tax planning, asset allocation, risk management, and retirement planning. It means maximizing one’s wealth by investing in different asset classes, to capitalize on their unique risks, rewards, and liquidity attributes. Therefore, it becomes necessary for an investor to identify his financial needs and objectives, understand his investment options, and decide on an appropriate mix of various investment options. In general, it is recommended that financial planning begin as early as possible, when a person begins earning, so that they can benefit from compounding when they reach retirement. Capitalization means calculating the interest paid using the principal plus previously accrued interest. Every investor has different goals in life and in order to achieve that goal in a systematic and planned way, financial planning is necessary and for financial planning to be successful in the long run, an investor must understand their available finances in different forms and how he/she she can better use available resources (finances) to achieve higher returns and within a time frame set by them.

Therefore, in clear terms, financial planning can be defined as an exercise aimed at identifying all the financial needs of an individual, translating the needs into monetarily measurable goals at different times in the future, and planning the financial investments that will allow the individual anticipate and meet their future financial needs and achieve their goals in life. The goal of financial planning is to ensure that the right amount of money is available in the right hands at the right time in the future to achieve an individual’s financial goals.

Financial goals can be:

 Buy a house

 Provide for the education of a child and marriage or

 For retirement

These can be measured in monetary terms.

Personal financial needs are of two types: protection and investment. A

earning member providing their family with a continuing income after their

death is an example of the need for protection. Cover the expenses of the marriage

of a daughter is an example of an investment need.

Therefore, the financial planner helps the client to maximize his

financial resources by utilizing financial tools to achieve your financial goals.

Therefore, mathematically we can say:

Financial planning: FR + FT = FG


FR = Financial Resources

FT = Financial Tools

FG = Financial Growth

About the financial planner

A financial planner is someone who uses the financial planning process to

help another person determine how to achieve their life goals. The key

The role of a financial planner is to identify your financial planning needs,

your current priorities and the products that are best suited to meet your needs.


The financial planner typically possesses detailed knowledge of a wide range

of financial planning tools and products, but the primary role of the planner is to help

customers choose the best products for each need.

The planner can take a “big picture” view of a client’s financial situation and

make financial planning recommendations that are appropriate for the client.

The planner can see all the needs of the client, including budget and savings,

taxes. Investments, insurance and retirement planning or planner can work

with your client on a single financial matter but within the context of your

situation. Therefore, Planner distinguishes itself from other financial advisors, such as

tax advisors and insurance agents, who may have been trained to focus on a

particular area of ​​a person’s financial life.

Basis for financial planning

Financial planners generally look to “The Life Cycle Stage” to make a well-defined financial plan for their clients. As the need of each stage of the life cycle is different, the financial planner must carefully design an adequate financial plan for his clients so that they can successfully meet their objectives within a given level of time and resources. However, priorities will change as people age and their personal circumstances change.

The life cycle of any individual can typically be subdivided into the following stages:

 Infant Stage

 Young Single Stage

 Young Married Stage

 Young Stage Married with Children

 Stage Married with Adult Children

 Post-family/Pre-retirement stage

 Retirement Stage

Steps to get the maximum benefits from a financial plan:

To reap the maximum benefits from a financial plan, retail investors should consider the following steps:

1. They must know their goals correctly and with a clear vision to achieve them.

2. They must have a clear estimate of the time frame from their own personal experiences and observations to achieve their goal.

3. They should not rely solely on what financial advisers say, news reports say, but should do extensive research of their own into the nature and potential of the return-producing stocks a particular scheme invests in .

4. They must not be attracted by emotional feelings of the market.

5. They must not time the market for entry or exit. The rule of thumb says that the best way to enter the market is during the bear phase.

6. They should try to analyze their risk appetite while looking for investments. Yes, when faced with a problem, they can also receive help from financial experts.

7. They must promptly review their portfolio when the market fluctuates or at the time of inflation.

8. They should be well versed in the financial statements of those companies from time to time whose shares they prefer.

9. They must have sufficient backup of their additional financial resources at the time of losses, should they occur.

10. They should diversify their holdings including through mutual funds as much as possible to minimize risk.

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