The mantra of successful financial planning

Financial planning aims at achieving financial goals within a given period of time. The aims can be achieved only when the investor adopts a disciplined approach and never loses the focus on the goals to be achieved. Let us look at some of the prerequisites of successful financial planning.

Starting early: The success of financial planning is assured when one begins working towards financial goals early in life. Beginning early gives one a headstart, as the power of compounding comes into play over the long term and even small investments made regularly multiply into big amounts.

Selecting the right instruments: This is a crucial aspect of financial planning and one needs to do proper homework to choose the right investment instruments that can deliver the desired returns at the end of the investment tenure.

Proper asset allocation: One needs to diversify one’s investments to mitigate risks. Therefore, the right mix of various asset classes is essential in the portfolio to ensure proper diversification. It is necessary to take into consideration the risk-adjusted returns of each asset class to optimise the overall returns of the portfolio.

Keeping the focus: One needs to remain completely focused towards achieving the financial goals and should not get perturbed by market volatility and temporary setbacks.