Investment and Financial Planning for Retail Investors

investing and financial planning
Importance of Investment and Financial Planning

Importance of Investment and Financial Planning for Retail Investors, Here’s what you should know

What is Financial Planning: 

In the fast-paced world where time is money, Indian finances have contributed to the world economy colossally and have changed the face of financial planning in a major way.

Over the last few years, terms like financial planning and personal finance have emerged as buzzwords that truly define the financial planning sector. Financial planning is like a reigning emperor when it comes to all the significant mediums of communication like newspapers, magazines, television channels and promises to be on the priority list for everyone.

With the entire hullabaloo on financial planning, it's obvious to draw doubts and demand clarity on the real concept of financial planning. Also, it's natural to have a mind full of questions for retail investors with regards to all the attention it hogs. Your answers lie here.

Financial planning is a well-thought-through process that assists an individual or retail investors to channelize their finances and investing through a road-map to meet expected and unforeseen necessities in life. In a nutshell, the superior rationale of this is to equip and shield an individual in the testing times and contingencies as well as, accomplish all their chalked out investing goals.

Who are Retail Investors:

Individual investors are known as Retail Investors. In simple terms, retail investors are non-professional investors who invest in various securities like MF, Stocks, ETFs through intermediaries, and brokerage firms on their investment account.

Retail investors are small investors have with limited purchasing power with less capital and minimum knowledge. Retail investors often pay high brokerage charges and they do have a big impact on market sentiments. The inflow of Mutual Funds, IPO ETFs are mainly of retail Investors' positive sentiment in the market.

What is Investment Planning:

The process of matching financial goals and objectives with the investable amount of an individual or retail investors is Investment planning. Investment planning is one of the important parts of financial planning. 

Once the retail investors chalk out the financial goals and the objectives of investments. The investment planning process starts to design and match with the individual or retail investors' wealth and resources in the most efficient way. There are many investment products like bonds, mutual funds, equities etc which can be used while designing the investment planning of retail investors. 

Significance of effective Financial Planning

In the present scenario, it extremely essential to realize the significance of effective financial planning. Among several other factors, inflation and changing lifestyles are the two most influential factors that affect the financial scenario.

To be precise, inflation is a situation where a large number of finances pursue a limited number of goods. Consequently, it results in depletion in the value of money. In simpler terms, it could be defined as a rise in the general price level. For instance, a product that costs Rs 100 at present would cost Rs 105 a year from today, assuming the hike in prices at 5 percent. This is the repercussion of the upswing in prices over one year; over a 30-Yr period, assuming that inflation continues to rise at 5 percent, the same product will be available at Rs 432.

However, an effective investment and financial planning is a well-equipped weapon to guard you against the impact of inflation. This works effectively in irreversible phases like retirement when expenses persist but income stands still or is nil.

Getting on to the next factor, changing lifestyles; it signifies the rapidly fluctuating standard of living due to higher disposable incomes. For example, products like cars that were once coined as luxuries not too long ago, have gradually transformed into necessities in the current scenario. Financial planning plays a crucial role here assisting the individuals to keep pace with their lifestyle despite all the necessary, irreversible upgrades.

Most importantly, financial planning helps you safeguard your money during irreversible contingencies like medical emergencies or unplanned expenditures that an individual might have to cope with. Precisely, disciplined financial planning and investing can capacitate you to conveniently mitigate such consequences without straining your finances.

Principles of Financial Planning

Primarily, financial planning is a combination of great discipline and religious adherence to the principles of financial planning.

It is essential to comprehend that discipline has a crucial part to play at every consecutive stage of financial planning, beginning from setting objectives to the actual execution of plans to accomplish those set objectives. In fact, an ad-hoc approach while dealing with finances is one of the major reasons for financial distress.

Eventually, the fundamental principles of financial planning boil down to setting objectives, investing in line with one's risk appetite combined with successful asset allocation. In a nutshell, achieving financial serenity is not much of rocket science. All it requires is a disciplinary approach towards the basics of financial planning and investing

Importance of Investment and Financial Planning

As rightly said, "The trouble is, you think you have time"; we all knowingly and unknowingly take our lives for granted living by this mantra. But the real question is do you really have time? The answer is simple, NO! Hence, it becomes a mandate to secure your finances through effective financial planning as soon as possible. Also, it is important to note that since our lives keep transforming with time, it becomes essential to review and update your financial planning too. 

Starting early is the key to ultimate financial success. This is mainly because by the time you face emergencies or even realize the significance of being hand in hand with changing times you might be hanging in the lurch! Complacency leads to stagnation and eventually, takes the shape of regret.

The dynamics of effective Investing and Financial Plans keep fluctuating as per the changing socio-economic environment, as well as, the stage and situation in your life. Sadly with the human tendency to take things for granted and procrastination, an individual fails to review the financial situations as per the transforming phases in their lives. It’s extremely essential to review your financial plan at least once a year to reap the benefits of continually changing investment opportunities and attached risks.

Why retail investors should do Financial planning regularly?

The retail investors should understand that the key to a successful life with a contented lifestyle is not to stagnate. It is essential to realize and identify the needs of the changing phases of your life as well as, the rapidly changing, irreversible expenses of your loved ones. Also, needless to say, the complexities of life keep changing along with time offering you modernistic investment opportunities. 

Essentially, the basic mantra is to comprehend your present requirement and adapt to a new plan immediately to meet your necessities. Also, it is necessary to write a will at the correct time to identify your beneficiaries during the important phases of your life like First job, marriage, buying a house, children, promotion, education/marriage, grandchildren, or even retirement.

There would be no room for the old investments making regular updating a priority! As it is rightly said, “Change is inevitable”. Hence, it becomes necessary to embrace the change and be prepared with effective financial planning as per the ongoing trends along with variable economic, political, and family conditions. Our mantra to retail investors is "be smart and do Investment and financial planning wisely for a safe and secure future". 
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Happy Investing

Finogyan Team

Investment and Financial Planning for Retail Investors  Investment and Financial Planning for Retail Investors Reviewed by Finogyan on June 24, 2020 Rating: 5


  1. It is true that investment and wealth planning in this fast-paced world is highly important. If you want to live a peaceful life then you should make efforts to create a goof savings plan that not only helps manage present finances but ensures that you would have a secure future too. I have just got my wealth plan created from a reputed certified financial planner india and will be following it strictly.

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