INVESTMENT

PLANNING
Session Objectives
Why Investment Planning?

Investor Types based on risk appetite

Tips for effective investment planning

Investment options

Advantages of Investment Planning

Types of Planning
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Why Investment Planning?
Investment planning focuses on identifying effective investment strategies according to an
investor’s risk appetite and financial goals.

Investment Planning is important because it helps you to derive the maximum benefit from
your investments.

Your success as an investor depends upon your ability to choose the right investment
options. This, in turn, depends on your requirements, needs and goals.

Investment Planning also helps you to decide upon the right investment strategy. Besides
your individual requirement, your investment strategy would also depend upon your age,
personal circumstances and your risk appetite.
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Aspects of Investment planning

Long-term v/s Short-term Risk v/s Return

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If it is a long term goal, then you should invest
in securities that give capital growth over long
time. The chief investments in this category ●
Higher the return, the greater the risk
are stocks, mutual funds and real estate. ●
If your risk appetite is high, you can
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Short term investments or regular income
go for these high return investments.
investments focus more on giving returns
rather than capital appreciation. These The risk appetite depends on age,
investments are made for short-term goals or current income, responsibilities,
for getting regular and periodical income. lifestyle, etc.
These could be fixed income investments like
bonds, certificates of deposit, etc
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Investor Types based on Risk
appetite

Conservative Investor

• They have a low risk tolerance. Here, most investments are safe and income investments
like fixed interest bearing instruments, cash, bank deposits, etc.

Balanced Investor

• Here, the risk tolerance is average. The portfolio is equal in terms of growth and income
assets. Hence the portfolio carries both equity and mutual fund products as well as
interest bearing securities.

Growth Investor

• Here the risk tolerance is high. Major portion of portfolio includes growth investments
like equity, mutual funds, real estate, etc.
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Tips for effective Investment Planning

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Choice of Investment Options
Right investment is a balance of three things

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This will cover the ease with which the investment can be covered to cash to meet expenses. Some liquid investments are required to meet
exigencies that arise in the normal course or otherwise.

Liquidity

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This is about the risk factor of the investment. The worst case is losing all the invested money. The milder case is losing on the income or low
income growth or investment growth. Inflation is also a risk, as the purchasing value of money reduces.

Safety

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Income generated by investments is another factor to consider. Safe investments offer steady but lower income and risky investments offer high
returns or no returns at all!

Return
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Investment Options

Investment Options

Short-term investments Long-term investing

• Savings bank account • Post Office savings • Bonds and debentures • Life Insurance Policies
• Money market funds • Public Provident Fund • Mutual Funds • Equity shares
• Bank fixed deposits • Company fixed deposits

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Investment Avenues Chart

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Long Term vs Short Term

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Timeline Pyramid for Investment

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Advantages of Investment
Planning

Helps generate and maximise income

Ensures appreciation of capital now and in the future

Strengthens the portfolio

Reduces taxes

Keeps you financially prepared for any situation

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Types of Planning

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Types of Planning

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Types of Planning
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Planning for education of children, whether it be school education or college
Education Planning
level education.

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Planning for all risks including housing, medical, safety, life
Risk Planning ●
This is initiated to cover all life stages.

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Planning for building one’s wealth in the form of buying the first house,
Investment Planning
vehicle, upgrading the house / vehicle, taking luxury vacations and so on.

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Tax planning allows the other elements of a financial plan to interact more effectively by minimizing tax
Tax Planning liability. It encompasses timing of both income and purchases and other expenditures, selection of
investments and types of retirement plans, as well as filing status and common deductions

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Planning for all requirements after an individuals retirement, when there is
Retirement Planning
little or no cash inflow, while the expenses may be fairly high.

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Planning for special circumstances in life such as death, loss of work or remuneration,
Special Planning medical emergencies, divorce or separation, having children and so on. 25
THANK YOU