Financial planners say investors should build an emergency fund, secure adequate insurance and match investments to their goals and time frame before increasing exposure to equities.
A disciplined investment plan does not begin with a large sum of money. It starts with clear goals, a realistic view of risk and a willingness to stay invested for the long term, according to financial planners Poonam Rangta and Pooja Bhinde in Zee Business’s Money Guru programme. Their advice reflects a broader principle echoed by Capital Group and Vanguard: when investors define what they are saving for, they are better placed to choose products that match their needs, time frame and tolerance for volatility.
The first step is to be specific about the goal. Whether the target is buying a home, paying for a child’s education or building a retirement pot, the investment plan should be based on personal circumstances rather than on what friends or relatives are doing, Rangta said. Capital Group and Vanguard both stress that goals-based investing works best when people link each decision to a clear purpose, instead of chasing whatever appears attractive in the market at the time.
Before committing money to equities or mutual funds, Rangta said households should build an emergency reserve. A fund covering about six months of essential spending can help absorb shocks such as job loss, medical bills or business disruption. Independent guidance from RiaFin, Chase and Arken Invest similarly recommends keeping three to six months of core expenses in a liquid, easily accessible place such as a savings account, recurring deposit or money market-style instrument.
Bhinde said financial protection matters just as much as investing. Health cover for the family and sufficient life insurance for those with dependants can prevent a crisis from derailing long-term plans. For earners with financial responsibilities, she suggested a term policy worth 15 to 20 times annual income, although the right level depends on liabilities and obligations. That warning matters because, for many households, an uninsured medical emergency or an untimely death can be more damaging than a poor market year.
The pair also urged investors to match products to the period for which the money is needed. Bhinde said money required within three years should generally not be placed in equities, which can be volatile over short stretches. For goals that are two to five years away, a mix of equity and debt may be appropriate depending on risk appetite. For longer horizons, such as retirement, a greater allocation to equities can help build wealth over time.
Even small contributions can make a meaningful difference, Rangta said. She cited an example in which an investor putting in Rs 5,000 a month through a systematic investment plan, or SIP, could accumulate roughly Rs 50 lakh over 20 years at a 12 per cent annual return. That figure is illustrative rather than guaranteed, but it shows why consistency matters more than size at the start. She also recommended a step-up SIP, in which the monthly contribution rises each year. In her example, increasing a Rs 5,000 monthly SIP by 10 per cent annually could build to about Rs 1 crore over 20 years at the same assumed return.
Bhinde added that investors should plan around inflation as well as nominal costs, because the price of future goals will almost certainly be higher than today’s estimate. That means setting targets in real terms, spreading money across suitable asset classes and reviewing the plan as income, expenses and family priorities change. In practice, the message from both advisers was simple: begin with protection, invest with purpose and increase exposure gradually as time and confidence grow.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
