Preparing An Investment Plan

Financial planning is essential for an investor to ascertain their financial objectives and allocate savings across various types of investment instruments.

An investor’s first allocation of savings should relate to the quantum of funds required in the near term/for emergency purposes —also called rainy-day money. Since capital preservation is the only objective of this allocation, this investment should be in instruments such as tax-free government bonds.

The equity allocation of an investor, regardless of whether it is in small caps or large caps, should be in a portfolio which has been thoroughly researched for:

a) clean accounts; 
b) prudent and efficient capital allocation with strong free cash generation; and
c) massive barriers to entry against competition.