HomeInvestment7 Steps of Investment Process

7 Steps of Investment Process

Steps of Investment Process – When it comes to life, we all have been investing in our efforts, time, and resources in different realms.

What’s common among all sorts of investments is the aim to gain a good return. You have a purpose of investment and a desire to seek a particular amount of profit or benefit within or after a stipulated time. It could be made to procure money, services, property, and many other assets.

Before going under the investment decision process, it’s imperative to go through the meaning of investment first.

What is an Investment Process?

An investment process is the deployment of capital on assets to earn an income after a while. Under this process of investment, an investment is made in different asset categories with a presumption to earn some return in terms of an income or an asset in the future.

The most important quality for an investor is temperament, not intellect. – Warren Buffett

The procedure incorporates a thorough study and examination of a diverse range of assets and the amount of risk involved in it. The common types of investments comprise gold, real estate, stocks, insurance, commodities, and many more.

However, to attain a successful investment process, you can resort to some easy steps:

7 Important Steps of Investment Process

Gaining a rewarding investment has always been a perplexing and confusing task. It takes a good amount of time, information, and assets to convert an investment into a benefit.

Hence, following well-defined and time-tested procedures based on your objectives and needs can enhance the probability of your success.

Here are 7 steps in investment process for you to step into the world.

1. Ascertain Your Investment Purpose

Firstly, you should determine your need for investment. Once the objectives get cleared, you can readily move forward. Your goal could be to achieve anything from earning capital to receiving some aid and so on. This requires a proper understanding of your requirement and risk involved in the particular domain of investment. It will assist you in making a suitable investment as per your needs and making up your mind for the losses you could have to encounter.

2. Determine Your Asset Allocation Area

This step encompasses the decision related to asset allocation. Here, you need to <strong>choose a definite sector for investment</strong> which may include securities, insurance, real estate, equity, etc. This includes the decision of investment in an industry or asset such as domestic or foreign assets. It is suggested to consider micro or macroeconomic elements as well as the market condition in general.

For instance, if someone wants to derive more money in the future, he or she needs to infuse some funds in the financial market in the name of bonds, debentures, deposits, and so on. Whereas, if any person is planning to secure the life and health of his family members or dependents and gaining the tax benefits as well, then an investment in the life or health insurance plans is the pertinent resolution.

3. Examination, Searching, and Selection

Here is the point where you need to finalize a proper investment plan. But, before executing the same, you need to gain in-depth information about the chosen area of investment. Assume as if you are investing in shares, then evaluation of market trends, industry prospects, global events, and other factors need to be done.

Similarly, to devote your wealth to medical insurance, you should check your family size, family income, family medical history, etc., to make an effective investment. After reviewing these factors, you can select the plans online or can call some broker or agent for further assistance.

4. Implementation

Purchasing a scheme online or offline is the imminent step after the selection process. Sometimes, to eliminate the least remaining confusion or expediting the procedure, an agency can be consulted too.

It is a good choice as you can easily find the answers to any and every question related to the return on investment. Also, it may help in analyzing the performance of your investment plan and making pertinent adjustments based on changing laws, purpose, investment performance, and/or market conditions.

5. Create a Personalized Strategy

Work with a financial advisor to create a personalized strategy financial plan that meets your requirements. He will create a strategy based on your income, goals, preferences, and risk profile. Nobody knows you and your plans better than you. Therefore, you may be the most qualified person to create a personalized strategy.  If you want to create your investment strategy by yourself then follow these points.

  • Set realistic investment goals.
  • Calculate how much you need to save every month.
  • Choose your investment strategy- For example, if you are thinking of a long term investment, you might choose a more aggressive, higher-risk investment.
  • Now develop an investment strategy to guide your investment decisions.

When putting money in the investment, always choose the right investment path that will make you a profitable direction.

6. Cash Flow Analysis

One of the most significant steps of the investment process is a cash flow analysis. It is a method of checking financial health. The statement of the cash flow depicts where you are receiving money from and how it is expanding it. A positive cash flow means you are gaining profit from the investment, and a negative cash flow means your investment is at risk. In the above-mentioned 7 steps of the investment process, cash flow is the most important one. It gives you a clear picture of where you stand in terms of finance.

7. Review and Next Step

Almost every successful investor reviews his first process and then moves to the next step. Reviewing every small detail, and monitoring investment processes closely is a crucial investment step. It always keeps you protected against the odds. The market is hard to predict, but when you walk slowly, and with full focus, the chances of facing risk will become low. So, consider these 7 steps of the investment process.

Pursuing these steps will steer you towards making a prudent investment decision for any sector.

I hope you found the above investment process steps helpful.

Now I’d like to hear what you have to say.

Which aim do you have to gain a good return?

Let me know by leaving a comment below right now.



Ajeet Sharma, the founder of Financegab and a well-known name in the field of financial blogging. Blogging since 2017, he has the expertise and excellent knowledge about personal finance. Financegab is all about personal finance which aims to create awareness among people about personal finance and help them to make smart, well-informed financial decisions.


Most Popular