HSBC Living Finance

Steps in investment planning

It doesn't matter how much money you have to start investing. (This money would be known as your 'capital'.) What's important is that you follow these steps when planning your investments.

Step 1: Identify goal(s)

What is your goal?
How much money do you need to fulfil your goal?
What do you expect from the investment? A regular income? To increase your capital? To preserve your capital? To rebalance your portfolio?

Step 2: Assess your current situation
Here are some factors you need to consider when determining your current situation

RISK AND RETURN OBJECTIVE
Based on your current situation what kind of returns do you expect? How much would you need to fulfil your goal?
What is your risk acceptance level? Can you bear the loss if you were to lose most of your investment or even all of it?

TIME HORIZON
By when do you need the money back?

PERSONAL FACTORS
By reviewing monthly income and spending, both fixed and variables, how much money can you spare for investing?
Will you prefer investing money in a lump-sum amount or on a monthly basis?
Will your income and spending fluctuate or remain stable throughout the investment period?
Do you have surplus money or insurance arrangements that can cover expenses for unexpected events? Is that money enough?
Are there any tax or legal constraints on specific investment markets or products?

Step 3: Identify investment tools to achieve your goals
Plan your investment portfolio in a way that will help you achieve your goals. You need to review both the above factors (as laid down in step 2) and external factors such as market situations and relevant financial information. You need to familiarise yourself with the characteristics and risk levels of the investment tools in which you intend to invest your money.

Step 4: Monitor and evaluate investment returns continuously
Monitor and evaluate your investment portfolio on a regular basis to ensure that its performance matches your expectation. Adjust your investment strategy if necessary.