It is the innate desire for everyone to build a robust investment corpus. However, to build a strong portfolio of investment and earn valuable returns, you must have a healthy investment plan. Often a lot of amateur investors, who jump into the investment bandwagon tend to fall out as soon as they start investing. This is mainly because they don’t have a plan. Here are five tips that will help build an investment plan that works for you:

Start Early

Several investment experts from around the world have corroborated starting early is one of the best ways to build a robust corpus for the future. When you start investing early, you can get the maximum benefit from the long-term investment horizon. As you have age on your side, you can opt for an aggressive investment approach so that even if something goes wrong, you have time to recover and generate profits after that. Also, when you start early, you have limited responsibilities, and you can afford to take risks.

Build an emergency fund

No matter what instruments you invest in and the type of investment approach you have, it is paramount that you build an emergency fund. Experts suggest that you must have at least 6 to 8 months of your salary as an emergency fund. You can use this amount to meet the sudden expenses that may arise anytime in your life, including medical cost, loss of a job, accident, etc. This way, you will have enough liquid cash to meet the immediate expenses without touching your savings. So, your investment plan must include investments in specific financial instruments like savings deposit or mutual funds that allow you to withdraw funds at any time you want.

Take goal-based investment decisions

A lot of people in India invest in various instruments without having any goal. But, experts suggest that this is not a good practice. You should set a specific goal and choose an investment instrument accordingly that will help you achieve the goal. Also, when you have a specific goal in mind, it helps you to be disciplined with the investment. The goal can be anything, be it buying furniture at home or going for a vacation. Divide the goal amount with the number of months you think you will need to reach the goal. So, for instance, if you wish to buy a bike worth Rs. 60,000 in one year, then you must save Rs. 5,000 every month.

Learn the basics of investing

Invest in various financial instruments is not as easy as it may sound. Different investments work differently; hence before you make your final decision to invest in a particular investment tool, make sure to read about it thoroughly. Know how the investment works, is suitable to your financial goal, does it help you save taxes, what are the strategies you must use to accomplish your goal. Understanding the basics will help you make a more informed decision and mitigate the risks better.

Get acquainted with taxes

Tax saving is one of the critical aspects of financial planning. Every investor wishes to reduce their tax liability. In India, there are several tax-saving investments and the sections under which they offer the deduction. You need not learn about the tax rules, you can always seek help from the expert accountants, but getting familiar with taxation can help you save a significant sum on taxes.