We all have particular objectives that we would like to achieve in our lifetime. However, it is not possible to reach those financial milestones by simple earning and saving alone. This is the reason you need to have a good investment plan that is critical for achieving your financial goals.
If you want to buy a home or develop a retirement corpus that keeps you financially independent, then you need to find investment avenues that will allow you to grow your wealth over a period of time. But to be able to attain that objective, it is essential to have a goal in mind before you start investing.
The process of investing allows you to grow your wealth rather than maintain your savings. As a result, what you get is greater financial rewards in the future. A robust investment plan is made of financial instruments that are suitable for your budget as well as future goals. Thus, it is essential that you choose the right vehicles for your assets for it to work in your favour.
If you want to build your wealth and financial stability, then you need to understand the importance of an investment plan. There are so many benefits of investing that it makes sense to get started right away. With the right approach and financial planning, you will be able to not only be able to create future wealth but also earn an income through your investment. However, you must always keep your risk appetite and ultimate goals in mind before investing.
Let us see why it is essential to have an investment plan in India and how it can help you reach your financial goals.
1) Help you build a corpus of funds
With a systematic investment plan, you can cultivate the habit of investing regularly. By staying invested for an extended period, you will be able to accumulate higher corpus because of the power of compounding. But what is the power of compounding?
Compounding is all about reinvesting your earnings at the same rate of return to grow your capital amount, year on year continuously. Starting with your investments early means your money has that much more chance to grow over time. The sooner you invest in a financial instrument, the wealth you can create by compounding.
Choose your investments wisely that offer high rates for it to yield an appealing return that will allow you to achieve your financial goals, as envisioned.
An investment plan in India is designed in such a way that you develop a routine of investing regularly rather than an ad-hocmanner. This allows you to maximize the power of compounding and earn further income.
Goal-based wealth management is the best way to invest your money; it is aligned with your time and asset allocation. This means you can avoid saving too much or too little and take just the right amount of risk, thereby allowing you to achieve optimal returns.
2) Save taxes over the years
Another significant benefit of having an investment plan in India is your ability to save taxes. For example, the premium that you pay for your life insurance policies or ULIPs is all tax-free u/s 80C of the Income Tax Act. Even the maturity benefit is exempted from being taxed as per section 10 (10D). subsequently, you are not only able to grow your wealth organically but also save much money on taxes over the years.
If you want to lower your tax burden and increase your wealth, then you must carefully assess the pension and retirement plans that you can add to your financial portfolio.
3) Develop a habit of Savings
As stated earlier, systematic investment plans are investments made at regular intervals, that is monthly, quarterly, or every six months on a predetermined day. This amount is automatically debited from your account and is invested in a scheme chosen by you as per your risk appetite and financial goals.
By having an investment plan in place, you get a clear insight into what you need and how to reach that objective. Investment goals give you a number in terms of funds you need to achieve specific financial goals while specifying the time limit that you need to allocate to each goal. As a result, you can break your target down to micro-goals so that you can inculcate the habit of saving regularly and make all your dreams come true.
4) No need to Take Financial Support through debt or loan
With an investment plan, you can plan your life in terms of financial objectives and start investing money to fulfil that goal when the time comes—for instance, investing in your child’s college education.
When you have long term goals of 10 or more years, then it makes sense to invest your money now to help you reach your goal faster. As a result, you will not have to depend on expensive loans and lifetime of repayment schedule to pay for it with twice the money. For instance, if you want to buy a house or save up for your retirement, then planning for it today with a robust investment plan will help you stay on track.
Investment planning is a strategy that allows you to grow your assets over a period of time. With time you will be able to create a way to reach your financial goals in the future without affecting the quality of your life today.