Importance of Financial Planning for a Secure Future | LTMF

I Have you planned for your secure future? Click here to know the steps of financial planning, goal identification/requirements, investment options/plan and more.

The first step to financial planning would be to identify your goals, where you are now, what you want to achieve and how much each of your goals would cost or need. Setting time frames is essential since the sooner you need money the higher would be the need for safety of capital and liquidity.

In your twenties, short term goals could include a wedding, a car, etc. whereas in the medium term your goals could be buying a home and financing your children's education. A long term goal could be retirement.

Educating oneself on the key financial concepts and the types of investment options is always beneficial as each type of investment works in a different way. For example, equities offer potential for both growth and income, while bonds would seek to provide stability and income and insurance would provide a life cover. Nevertheless, one can take the help of a financial advisor to understand these and chalk out a suitable investment plan.

At any stage, an asset allocation approach could be the ideal way to investing as a well-constructed and diversified portfolio reduces risks and smoothens returns. For instance, bond funds and gold investments could have a tendency to fare better during periods of uncertain economic conditions, while growth investments like equities and equity mutual funds may provide attractive returns when economic conditions are expected to be more favourable. The value of bonds and stocks can often move in opposite directions, but taken together, a portfolio that invests in a range of quality assets may deliver attractive returns with lower risk. Single individuals in their twenties have the ability to take on higher risk and could allocate a big portion into equity and equity related investments.

Moreover, the younger you are when you start, the less you will need to invest given the power of compounding and the length of time until retirement. Systematic monthly investments could help in building up a sizeable corpus over the years.

Do not forget to boost your contributions in small, steady increments and time the step-ups to your annual increments and bonus. Also one could include tax saving strategies in your overall financial plan. Beginners may find financial planning intimidating and complex. However, investing is not that difficult and can be started with small amounts on a regular basis.

For those who are closer to retirement could invest into less risky and safer investment options such as liquid and debt mutual funds and fixed deposits which endeavor to provide a steady flow of income at the later stages of life.

Successful financial planning not only entails investing regularly but also analysing investments every few years as your goals could need re-prioritizing with changing lifestyles and age. Instead of looking at the end goal, take stock of how far you have come and what changes you need to make to your portfolio. If invested in equities and equity related mutual funds, it is advised to bear in mind that you should not be impacted by short term fluctuations. Remember systematic investing would not only make you financially secure but also prepare you for important or unforeseen events in life.


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Investors should deal only with Registered Mutual Funds, to be verified on SEBI website under Intermediaries/Market Infrastructure Institutions". Refer for details on completing one-time KYC (Know Your Customer) process, change of details like address, phone number etc. and change of bank details etc. For complaints redressal, either visit or SEBI's website


Disclaimer – This document is for general information only and does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this information. This document provides general information on performance; financial planning and/or comparisons made are only for illustration purposes. The data/information used/disclosed in this document is only for information purposes and not guaranteeing / indicating any returns. Investments in MFs and secondary markets inherently involve risks and recipient should consult their legal, tax and financial advisors before investing. Recipient should also understand that any reference to the indices/ sectors/ securities/ schemes etc. in the document is only for illustration purpose and should not be considered as recommendation(s) from the author or L&T Investment Management Limited, the asset management company of L&T Mutual Fund or any of its associates. Recipient of this information should understand that statements made herein regarding future prospects may not be realized or achieved. The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions.


Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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