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Remember the good old fable where the grasshopper sang all winter while the ant laboured away. Think of the moral behind that story, albeit you may find it a bit childish. Nonetheless, the lesson holds true for a lot of things in life, especially in reference to investment planning. When planning your investments it is always better to think in fast forward mode.

Assuming you are somewhere in your mid twenties or thirties, you need to assume the time in your life when you’re going to be fifty or sixty. What will your liabilities be then? What responsibilities will you have at that time? What health benefits should you plan for? Recreation and leisure, how much will that cost? Answer these questions and you’ll come to a solid ground on what your financial goal should be and how you need to plan for it.

Why invest in the first place?
The freedom of being financially independent is the one of the strongest reasons for anyone to consider in today’s time and age. If you’re among those who has just started saving money, consider it all the more pertinent to start saving now. The power of compounding is a very important wealth generation tool and it holds in good stead during times of contingencies.

Determine how much and how often you want to save. For some, investing small amounts once in a month can mean a lot and for some a stipulated quarterly or annual saving works best. Do consider the snowball effect- a method of saving in which small amounts gain in size and momentum and ultimately lead to exponential growth.

Let us explore some investment avenues that will throw a light on which investment vehicle to choose.

Stocks and Shares: When you have only a small amount to invest, risky investments can mean the possibility of losing all your money. It is often thought that shares and direct stock market investments are not just risky but also very oscillating by nature.

Mutual funds on the other hand provide a broad spectrum exposure and one can choose to go into high, low or medium risk categories. Track the record of the past few years and compare the gains made. Exercise diligence and discipline and reinvest the dividends and capital gains made and you will be pleasantly surprised by the amount you actually end up with.

ETF- Exchange Traded Funds: An exchange-traded fund is an investment fund that is easily traded on stock exchanges. ETF’s come in different categories and typically hold assets such as gold, stocks, commodities or bonds. This vehicle has become very popular of late because of their low costs, tax efficiency, and stock-like features. The downside of ETF’s is that they are subject to volatility in the stock market. Where a mutual fund is actively managed by a portfolio manager, the ETF’s is pretty much on its own.

Gold: The most popular and all-time favourite investment vehicle of Indians, gold never seems to lose its sheen. However, do remember that gold prices do correct themselves and it is prudent to maintain gold as an investment option for a limited period of time and park your remaining investments in another vehicle altogether.

Real Estate Investments: The good thing about investing in real estate is that the house can be rented or leased out, can be resold or kept as a nest egg for a rainy day. Whichever way you look at it, real estate seems to be the investment king. If you’ve got a house in a great location and fantastic project with good amenities you can be sure that the house will increase in capital value and give you good returns when you sell it.

There are many tax benefits that make real estate investments an attractive option. Especially in the case of working couples, applying for a joint home loan means eligibility for a higher loan amount. The benefits in a joint home loan are many, namely, the division takes place in the same proportion in which the asset is owned by each co-applicant, besides the tax benefits get divided among the co-applicants.

As a wise investor you should gauge the pros and cons and ensure due diligence before taking any financial decision.

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