The sooner you plan, the more chance you can achieve your wealth in the future. Some simple steps below can help you start a proper financial plan.
Investment objectives
It’s very easy to dream about a wealthy future if luxury lifestyle and numerous trips to interesting place, but let’s get back down to earth with your plan. You should know how much you need to achieve that dream, and in order to reach that amount, how much you should save and invest from today, every month, every year. The more details you input, the clearer picture you can see about your investment objectives.
How much you need to invest
How much you need to invest depends on your investment objectives. One can either choose to invest directly in a fund product, stocks, or subscribe a systematic investment program to invest with small but frequent amount from their monthly income. The good thing is that fund products don’t require a large amount to invest but they are designed to fit with all size of capital.
Flexibility and Liquidity
It’s very important to invest in assets that can easily be traded, exchanged or converted to cash when you need. You can choose to invest in securities, real estate, currency or any type of assets but make sure about their liquidity. Open end fund products are among the most liquid assets.
Risk Tolerance
High risk, high return is the rule of thumb. You should consider about your risk tolerance and decide the investment products that can be fit with the risk level you can suffer because there is no risk – free investment. Understand about your risk tolerance also help you react quicker with the volatility of the market.
Investment horizon
If you are in the monetary saving stage, your asset allocation should be determined primarily by the exact time when you need to use the money. In general, the further you are from your goal (e.g., saving for your retirement in 20 years), the more you can afford to invest in more risky investments like stocks. The shorter your investment horizon (e.g., saving for a child’s college education in five years), the more conservatively you should invest. If you are in the spending stage, such as retirement, your asset allocation should be determined primarily by the periodic income from the investment portfolio. Your financial specialist will help you make this decision.
Financial Advisor
Sometimes you cannot do it all alone because of your limit in time, experience, information or investment technical knowledge. Therefore, choosing a financial advisor is a good idea since he/she can support and consult you over managing your money.
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