Creating a personal investment strategy: Here’s what you need to know

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We have often come across financial experts talking about a financial strategy that is sometimes too difficult to follow or sometimes doesn’t fall into our way of investments. As an investor, there are various ways you can create a personal investment strategy.

A personal investment strategy can be constructed to assist individuals in allocating investible surplus and pursuing their particular financial goals and objectives. This also instils a greater sense of discipline in an individual’s investment activity. However, this should only be done with the assistance of a qualified and experienced financial advisor, many financial experts believe.

“A personal investment strategy will embrace all the major aspects of one’s investment behaviour more comprehensively, and therefore, it is extremely useful. Therefore, dependence on an advisor who has the requisite track record and experience is significant,” explained Joseph Thomas, head of research, Emkay Wealth Management.

How does personal financial strategy work?

You can create a personal investment strategy by following simple Do-It-Yourself (DIY) steps by identifying your goals, identifying assets to achieve those goals, investment terms, your risk appetite, etc.

“The DIY investment strategy may also help you to save on the advisory fees. But focusing on saving a small amount today may lead to a huge loss in the future. Also, creating your investment strategy will require you to do everything by yourself, right from research to planning and execution to monitoring,” pointed out Manish P Hingar, founder Fintoo.

“So, if you have the required expertise and time to manage all the aspects of investment planning, you can surely do it by yourself,” added Hingar. One crucial point to note is that, when it comes to market investments, the investment strategy may change over time, based on the opportunities available in the stock market.

“The only disadvantage is that it may not be possible to fully anticipate the disruption in business models which are being caused on account of rapid changes in business models,” said Vijay Bhushan, chairman, capital market & commodity market, PHD Chamber of Commerce and Industry.

The financial experts agree that the significant downsides of creating a personal investment strategy are that once a strategic plan is put in place, there is usually a reluctance to review frequently and change the course in case of need.

“One should not lose sight of what is happening around and should keep on checking on any headwinds that the strategy is likely to encounter. If this is not done, then optimisation of portfolio results and performance will become difficult,” said Thomas.