Here is how to create your own investment plan

The financial planning of any investor starts after he sets in his financial goal. Nevertheless, to achieve your financial goals, you also need to have a sound investment plan. Answering the following questions will help you to come out with a sound investment plan.
 
What is your objective?
 
Broadly, there are three purposes for which you invest, safety, income or growth. If you are in your late 20’s or early 30’s, growth may be your prime objective. Nevertheless, if you are a retired person, you want safety first and income second. Other questions are like, the risk you can afford to take and the duration for which you can invest. A retired person cannot take much of risk and he may invest in instruments that are short to medium-term in nature.
 
How much can you invest?
 
There are many funds that have a minimum investment limit. Nonetheless, the limit is not very high for any fund and you can invest from as little as Rs. 500. To come out with a workable investment plan, you should also understand what is the amount that you can invest. For example, a salaried person is more likely to use SIP for investment, while a retired person may invest in lumpsum. The amount you can invest in will help you to choose the right funds.
 
When will you need the money?
 
Knowing a timeframe for which you need to invest will help you to manage your cash flows. For example, if you want to buy a house two years down the line, you will create a different investment plan than if are investing for your retirement. In the former case, you need to invest in instruments that are less risky and have predictive returns. For the latter, you can choose instruments that are risky and may give you negative returns for the next couple of years, however, in five years they are likely to give you better returns.
 
Where should you invest?
 
For a better investment plan, investing in right kind of instruments is a must. Every instrument has its own pros and cons. Hence, it is better to lay out the list of all the instruments where you can invest and reach your stated goal. Next, narrow your final investment choices down to a few that you feel confident about and start investing.
 
Complete Example
 
Purpose: Buying a house after 5 years that will cost Rs. 50 lakh, down payment Rs. 10 lakh
 
Amount to invest: Rs. 1,700 per month.
 
Time-frame: Five years
 
What to invest in: Equity diversified mutual fund

Once you have a plan, stick to it! That is the key to a successful investment plan.