Managing your finances involves more than simply watching the numbers in your bank account go up and down. In order to truly take control of your finances, it is worth sharing your situation with a professional who has years of experience in understanding how to increase your net worth, tackle debt and approach your financial goals reasonably. This is where investment planning comes in. Investment planning is an important part of securing your financial future, and if you have not considered it before now, read on to learn more about how it can help you.
What Is Investment Planning?
Investment planning, in a nutshell, is the process of creating a robust financial plan for your future based upon the specific goals and risks that are present in your life and circumstances. Investment planning pays attention to the assets you currently have with a mind to turn them into greater amounts over time, managing both risk and potential growth to help you achieve a secure and stable return. Even if you have not yet invested any money and are working only with what is within your bank account, it is never too early to start investment planning.
How Investment Planning Helps: Creating A Financial Forecast
One of the main benefits of investment planning is, as its name suggests, the planning aspect. In order to get started, you will need to look at a variety of elements of your current financial health, such as your income. Understanding how much you make each month, what your monthly expenses look like, how your debt will decrease or grow based on your current payments and more will help you develop a forecast that enables you to predict what your future money can achieve.
The process of investing typically comes with the goal that you would like to see your money increase in value. Investment planning helps you to understand what your money can do for you and how to put it to work without undue risk of loss. While investment typically comes with some risk, the right risk tolerance for you can be decided based on your personal taste as well as your current situation, future goals and years until retirement. An investment planner can also help you to understand the risks and benefits of investment returns versus paying off debt and how the two can go hand in hand. A debt at a low interest rate may be worth keeping rather than paying off immediately if market returns can be more favorable.
Avoiding Tax Burden And Underpayment
Once you begin to capitalize on your investments, you will likely be expected to pay some form of tax depending upon what sort of accounts you are currently holding. Investment planning can equip you with the knowledge that you need ahead of time to plan for any taxes that will be due while simultaneously ensuring that you do not pay more than you need to. Whether you are using investments to fund projects now or are leaving your money untouched until after retirement, you will still need to consider how taxes can reduce your overall earnings and plan accordingly.
Develop A Robust Savings
Investments serve a wide variety of purposes, and an investment account need not be only for planning for retirement. Many people elect to use their investments as a form of saving and discretionary income, but investments can do so much more than simply grow by the amount that you continue to contribute with each paycheck or tax return. Investment planning will help you select the right mix of stocks, bonds and other vehicles to ensure that you can achieve your goals without bearing unnecessary risk. This may include leaning more heavily into bonds or diversifying your holdings across the international market. The solution that is right for you will consider the entirety of your financial situation.
Trust A Reputable Financial Advisor To Help
Whether you are just testing the waters of investments for the first time or you would like to get a second opinion on your investment portfolio to ensure that you are set up to meet your goals, an investment planning professional can help. The experts at Inflection Advisors would be happy to help you understand the strengths and weaknesses of your current financial situation so that you can be set up for success as much as possible. Reach out to learn more about how you can make your money work harder for you without exposing yourself to unnecessary risk. We are happy to answer any questions you may have and help you navigate investments to improve your financial literacy.