Planning is the key to better investment

Investing money judiciously is an important activity of every investor's financial life. However, many investors fail to make most of the ever-expanding investment universe. There are a number of reasons that impact the final outcome of their investment process over different time periods. Hence, as an investor, you must imbibe certain traits that can not only help you start your process right but also ensure that it remains on track through your defined time horizon. Here are some of these and how they can make you a better investor.

Look at the bigger picture: One of the key factors in your investment process should be to avoid following a haphazard approach of investing in different asset classes and exiting from them depending on how these asset classes behave at certain points. Needless to say, this approach can often make you miss out on opportunities in the market. Therefore, look at the bigger picture at the start by establishing your goals to be achieved over a short, medium and long-term horizon. A goal-based investment process ensures that you follow budgeting, give risk management its due and follow an asset allocation model that helps in creating the right balance between risk and reward.

Remain committed to your time horizon: Once a time horizon is assigned to a goal, you must remain committed to it irrespective of how the market behaves and continue your investment process. This approach not only helps you tackle the volatility but also benefit from averaging over time.

Be open and collaborative: Today, a lot of information is available on various investment options and strategies to invest in them through different mediums. Therefore, you must always be open to absorb this knowledge and use it in your investment process. If you find it overwhelming to analyse this information, don't hesitate to take help of an advisor. Once you start working with an advisor, listen to him/her carefully as that can go a long way in allowing you to understand the complexities of the investment world. Remember, the unwillingness to listen can make it difficult for you to adapt to the ever-changing investment and economic environment.

Flexibility is the key: While investment is an on-going process, there is no straight path to investment success. Therefore, your investment process as well as options must have the flexibility required to rebalance your portfolio in line with your changing circumstances as well as economic and political environment. Also, be prepared to tackle the challenge of non-performance of some of the investments in your portfolio. Although monitoring the performance holds the key to long-term investment success, don't get tempted to make frequent changes just because you have the flexibility to do so. Also, avoid discussing your portfolio with all and sundry as conflicting views on your portfolio composition can make you lose your focus and compel you to make investment decisions that may compromise your financial future.

Plan your tax investments well: Many investors have the habit of investing in a haphazard manner to save taxes. That's because tax savings investments are considered a burden rather than a tool to get the best in terms of saving taxes as well as making their money grow. In reality, if you integrate these investments into your overall investment program and adopt a disciplined way of investing through the year rather than at the fag-end of the year, their contribution to your wealth creation process can be tremendous.

The writer is CEO, Wiseinvest Advisors