Financial goals are individual in nature and therefore an investment plan also has to be designed according to one's individual circumstances and needless to add it has to be monitored as well. For those who still harbour the perception that it is too much of an effort, given below are 10 easy steps which may prove to be valuable in financial planning :

1. Risk is inevitable - Learn to manage it

Once you decide to put your money to create wealth in the long - term, then the question is not whether to take risk but what kind of risk you wish to take. Determining your risk appetite involves measuring the impact of a loss on your financial health and mental well being too. Money in a savings account may be safe but inflation will erode its' value, a risk that would almost ensure your failure to reach your goal of long-term wealth. On the other hand, investment in stock market may be risky over the short-term but would provide consistent and remarkable growth over the long term.

2. Begin early - To benefit from compounding

There is no truth to statements like 'I am too young to start saving'. For example, if you want to be crorepati by 45, you would need to invest only Rs.1.6 lakh per year if you start at the age of 25 (assuming 10% returns p.a.). But if you start at the age of 35 you will need to invest Rs. 5.7 lakh per year to achieve your 'crorepati at 45' objective. If you start saving and investing early, it will set the stage for significant financial growth later in your life.

3. Set realistic expectations - Avoid disappointments

Most people invest in stocks and expect them to double in quick time. If you want to make a quick buck then either buy a lottery or go to a casino (but be prepared to lose everything). Stock market is not a gambling den. The market is ultimately a reflection of economic growth. As such one needs to align one's expectation of returns in line with the expected GDP growth. Compare the performance of your portfolio with relevant benchmark indices and develop realistic expectations. Expecting unreasonable returns will surely cause disappointment, leading to excessive risk-taking.

4. Be a disciplined investor - Use time not timing

Market timing is erratic. You may be lucky once or twice but history has not produced a single investor who has made money regularly by timing the market. Don't panic when the market is dropping and don't become greedy when prices are rising. Emotions are the biggest enemy of a long-term investment plan. History has shown that when most investors are selling, you may have been better off buying.

5. Stay Invested - Be a long distance runner

The market always witnesses a lot of ups and downs but history shows that over time the value of a well-diversified portfolio will always appreciate. That's because prices don't rise every day - they spurt only during a few short intervals of time. Stay invested for longer periods. It will keep you from making common mistakes such as timing the market, picking bad stocks, speculating on stocks that are worthless, investing on borrowed money, trying to make a killing in some fad-of-the-day stock, etc. The reason most people don't get rich with stocks is that they don’t stay in long enough.

6. Don't churn your investments - It only increases costs

Don't invest in stocks instead buy businesses and that too after due research. Since businesses generally don't change fortunes overnight, there is no need to get in/ out frequently as and when some short-term events play out in the market. Too-frequent trading cuts into the investment returns more than anything else. Remember that the only person who makes money by your regular churning is your broker.

7. Have a diversified portfolio - Each investment class is important

Build a portfolio that is diversified consisting of different types of investments. Because different sectors of the market move at different times in different patterns, asset allocation tends to reduce the risk of huge losses and improves the chances of stable returns. Lack of a well-diversified portfolio, would leave you vulnerable to fluctuations of a particular investment. However, remember not to over-diversify and own too many investment products - more so if the corpus is small resulting in higher fees relative to the corpus size. Always seek to maintain a balance between the two.

8. Lose your losers - Retain your winners

Historically it is seen that investors book profits by selling the stocks, which have appreciated, but continue to hold on to stocks that have declined, in hopes of a bounce back. This one single fact has been the reason why most investors don't get the true benefit of the markets. While it is important not to underestimate good stocks, it is equally important to be realistic about investments that are performing badly. Identify your loss making stocks as it also acts as an acknowledgment of your mistake. But it's important that one should be honest and book a loss, else future losses may even be greater. In both cases, judge the companies on their merits according to your own research.

9. Hot tips usually turn out to be turkeys - Stay away from them

Relying on so-called hot-tips from someone, be it your friend, broker, neighbor or anyone else, is akin to gambling. Sure, you may sometimes be lucky with these so called tips but they will never make you an informed investor, which is what you need to be to be successful in the long run. Focus on the future of the company whose stocks you plan to acquire and not on the share price or some hot news. If you've got some information, chances are that so have many others and so the information is already factored into the market price.

10. Taxes should be factored in - But should be all encompassing

The primary goal of investing should be long-term growth of your money through sound investment decisions. Tax implications are important and you should always try to minimize taxes thereby maximizing your after-tax returns. But putting taxes above all else can often lead to poor decisions. For instance, people invest in insurance because it gives tax sops. But in the process they forgo opportunities of earning good returns and end-up compromising on the achievement of their financial objective.

Keep the above steps in mind while investing to ensure a sound and prosperous future.