Often investors start investing without any plan and incur losses, so to avoid any kind of loss, you need to have the right investment plan.

Your investment journey must begin with proper planning and keeping a time frame in mind. Set a time limit for investment and simultaneously learn how the market operates to land upon the best investment strategy for you.

Here are a few points that will help ease your investment process.

5 things that you need to know before you start investing –

  1. Make a household budget

Keeping a household budget is the most important point that helps you arrive at the amount of investable surplus, considering the total household income and expenditure. First, you will need to write down your various sources of income to create a budget. Then, cover everything from income to expenses. Once you start following a household budget, in no time, you will notice a pattern in your spending that will tell you where you need to cut back or how you can get the most out of your spending habits.

  1. Be debt free

Make a plan to get rid of debt as soon as possible if you have any. If an investor spends more than he earns, the net effect is not helping him build wealth.

Home loans come at around 8 percent, while personal loans range between 14 percent and 17 percent per annum. The interest rate to be paid on credit card balances is in the range of 36-48 percent per annum. Therefore, the first thing investors need to do is get rid of any debt.

  1. Get Adequate Security

Before investing, ensure that your existing assets and the house you live in are well protected, and this can be accomplished through a risk management tool called insurance. Avoiding medical expenses is the first step in the financial planning process. Hospitalization due to illness or accident can happen to anyone in the family at any time. Without a health insurance plan, one may not only have to dip into his savings, putting the long-term goals in jeopardy. But may also have to borrow from friends and relatives, so it is very important to take health insurance.

  1. Having an Emergency Fund

Unless one has a proper emergency fund, it may be useless to start investing for long-term goals. Emergencies reach without notice and require immediate action. Temporary disability can result in a setback to one’s earning capacity or loss of a job. Even a medical emergency may occur at any time, so in the absence of an emergency fund, one can do things like borrowing from friends, or relatives, mortgage gold, taking money at interest, etc. Having an emergency fund will prove beneficial in such circumstances.

To ease the process of accessing funds during an emergency, one can invest half of the fund in a savings account or a fixed deposit, while the other half can be kept in short-term schemes or mutual funds.

  1. Evaluate Your Risk Tolerance Correctly

Everyone has a different level of risk tolerance based on their age, financial situation, preferences, etc.

If you are young and have a stable job, you may be willing to invest in the ‘high risk, high return’ options. However, as you get older/retire, you may not have a job or a primary source of income and hence depend on your retirement corpus to meet your expenses.

Since different investment options carry different risks, you can choose your investment options based on your profile. For example, if you have a high-risk tolerance, you can invest in stocks, mutual funds, real estate, etc. Whereas, for a more secured investment, you can invest in fixed deposits, PPF, or bonds, or you can also invest in bond exchange platforms available such as the https://www.bondexchange.com.au/  which guarantees a high investment return and are highly secure.

Apart from these, ensure you understand what stocks, bonds, mutual funds, liquidity, volatility, and other investment basics are. Here, you don’t need to be a financial geek. You just need to know the industry enough to make the right call.


The investment comes with its pros and cons. Hence, it becomes necessary to have a proper investment plan before taking any rigorous step, as we are putting our hard-earned money at stake. Therefore, following the above-mentioned points will be handy while making investments and will surely help you achieve your high return goal.


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