Investment planning is the process of identifying financial goals and objectives, matching it with available resources and converting them through building a plan. It is the main component of financial planning.

An investment plan is a type of financial product that provides individual an opportunity to create wealth for his future and meet the financial goals by investing periodically in different investment plans, stock, mutual funds and other schemes.

It helps to create a habit of disciplined investment among investors so that they can gain long-term wealth and achieve their future financial objectives.

In simple Terms, Investment plan is a roadmap for investors to achieve their financial goals and freedom.

Advantages of Investment Planning:

1) Family Security

Investment planning is very important from the point of view of family safety and security. If anything happens to the working member in the family then the other members of the family will be financially secure by the investment.

2) Manage income/expenditure

It is possible to efficiently manage the income and expenditure of person with an investment plan. Managing income helps the person to manage other unimportant expenditures, tax payments etc.

3) Financial Understanding

Investment planning helps us to understand our current financial situation. It becomes easy for us to evaluate our investment or retirement plan by having financial understanding.

4) Savings for Emergency purposes

A working individual should invest in those investment vehicles which has high liquidity. Some investment vehicles are very useful in difficult times. As funds can be easily withdrawn in the case of emergency.

5) Standard of Living

The right investment plan made by the working person becomes a useful source of income for the family. For example, accident/death of the working individual in the family affects the standard of living to a great extent. In this hard times, the invested money can help to maintain the family’s standard of living to period of time.

6) Tracking Progress

No planning is complete without tracking progress. To quote Terry Pratchett,

If you don’t know where you’re going, you’re probably going wrong.

Investment Planning helps us to track our financial progress and how far we’ve come. It also helps us to analyse and create a strategy for future outcomes. Many investors may not recognize the power of compounding unless they witness it in action on their portfolio over the long-term.

7) Create a Comfortable Plan

Investment planning allows you to create a plan for growing your wealth that is comfortable for you. Not only will you feel better about the level of risk associated with the investments you’ve chosen, you’ll also be able to comfortably set aside money for new investments over time, rather than allowing your living expenses to suffer. Smart investment planning will create a way to achieve your financial goals in the future without affecting your quality of life today.

8) Taxes Saving

Investment plans are not only to cover risks or wealth accumulation plans, but also a tax saver. As per section 80C and 10(10D) of Indian Tax Act, premiums and pay-outs are exempted from tax. A right combination of savings, wealth creation, and financial protection provides tax benefits.

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