We all have desires and aspirations, however, we do not strategically plan our investments according to our goals. Most people just invest in an unplanned manner, without defining their financial goals.
Strategic planning adds direction to an investment. Strategic planning of investment is a structured, well thought out process for investing, where you know the purpose behind each rupee that is being invested.
While you strategically plan your investments, you consider your existing assets, expense patterns, risk profile, asset allocation and the various short, long and medium-term goals and creates a roadmap for each of these goals in a fairly predictable manner.
Strategic planning of investments comprises of two parts – planning and investing. It notifies the amount that is required to fund the goal and the amount that’s needed to invest regularly or one-time to get the desired returns. Investing that amount in the most suitable product helps to achieve your goal without much difficulty.
Strategic planning of investment is a process of defining the strategy or direction of allocating investments to pursue this strategy.
There are different ways to plan your investments, depending on the purpose(s) and goals of the financial planning.
For example, many people use vision-based or goal-based investment planning, in which they clarify the returns they want to achieve in the future or over time. They develop a vision of what they want to achieve – it can be anything marriage planning, retirement planning, child’s education planning, planning to buy a dream house, planning a dream vacation or planning to buy a dream car. They then articulate and implement the investment plan to achieve that vision. Hence, they work from future to present.
These goal-based investments can be long-term, medium-term or small-term planning.
Strategic Planning of Investments helps you to realize your financial goals.
Benefits of Strategic Planning
Strategic investment planning serves a variety of purposes, which includes –
- Clearly define the purpose and to establish realistic goals and objectives in a defined time frame
- Set priorities for your goals
- Develop a sense of ownership of the plan
- Ensure the most effective use is made of your hard earned money by diverting the money on the key priorities
- Implement the strategy and review it constantly from which progress can be measured
- Establish amendments when needed
- Ensuring efficiency and effectiveness
- Bridges the gap between financial capacity and financial goals
- Provides a glue to help you stick to your goals
- Produces great satisfaction and meaning among planners, especially around a common vision
- Increases productivity from increased efficiency and effectiveness