Here's help on how to plan your investments

Personal profile
Amit should detail out his age, family background, educational qualifications and professional experience. How much does he earn and save?
What are his assets? And what are his liabilities?
This will give an idea about how much Amit is likely to earn and save over his working life.

Investment objective
- What does Amit want in future - a house, a car, education and marriage of his children, retirement corpus, etc.? At what stages of his life would he need them?
- What is the investment amount?
- What is likely to be the investment pattern - regular or one-time or both?
- What is the investment horizon?
- What is the liquidity need? Will he need this money in next two months, six months or one year? Or can he keep it invested for much longer time?

Insurance planning
Is Amit adequately protected - both for life and medical emergencies? Are the amounts of life and mediclaim cover sufficient to meet the eventualities, in case of any unfortunate events?
Does he have the right policies?

Tax planning
Is Amit taking advantage of all the tax benefits available under the law? Is he rightly allocating his savings amongst the various options available, so that they are in line with his financial profile?

Risk assessment
What level of risk is Amit willing to take in equity? How does depreciation in investment value affect him, both financially and emotionally?

How critical are capital preservation, growth, regular income and volatility to Amit?
A broad perspective, taking into account all the above parameters and any other points specific to the investor, will give the appropriate investment solutions. It is said that right planning is 80-85 per cent important. Significance of actual investing is just 15-20 per cent.

COURTESY : www.rediff.com