Investment Planning is very important before investing
Investment Planning (Personal or Superannuation) is the process of matching your financial goals and objectives along with your investor risk profile and converting into building your plan.
Having an investment plan is a core part of the financial planning process, it is impossible to have one without the other. A starting point is gaining a clear and accurate picture of your current financial situation (what you owe, own and income and expenditure).
“Someone is sitting in the shade today because someone else planted a tree a long time ago.”
Warren Buffett
Your success as an investor which enables you to derive maximum benefits depends on the ability to determine:
- identify your goals and objectives (core to develop appropriate strategies)
- risk profile (tolerance/aversion to risk (key to developing investments strategies, to meet your needs and goals)
- investor time frame (short 1-3 years, medium 4-6 years, or long term 7 or more)
- capital growth v income
- investment amount $$$
Investment classes (Cash, Shares, Property, Fixed Interest) fall into two broad classes:
- Growth Assets – (shares, alternative, and property) carry higher levels of risk, in turn potentially receive higher returns over the longer term
- Defensive Assets – (cash and fixed interest) carry lower risk and in turn generate lower levels of return over the long term
Types of asset classes
- Cash – Money in a bank deposit or short term money markets
- Fixed Income – Bonds and debentures
- Property – Industrial, retail or commercial, unlisted or listed
- Shares – Securities that represent part ownership in a company (Australian or International)
Upon analysis of the above, appropriate asset allocation and investment selection are able to be established.
Once an Investment strategy and plan have implemented, it is important to monitor and adopt changes as necessary to ensure that investments remain in line with your goals and objectives.
With all investment comes some risk, having an appropriate strategy in place with the right diversification allows you to minimise and spread the risk.
Speak to a professional or contact our office if you would like to work together in mapping out the best financial investment plan for you.