top of page

4-Step Guide to the Investment Process

Updated: Apr 24

Objective — Portfolio — Fund — Evaluation

investment process

Successful investing is a long-term journey and not a once-and-done deal. How to start with your investing journey? What do you need to understand to become a prolific investor? What does a good investment process look like?

These four steps will help you get an overall gist of the investment process to take prior to selecting and investing in the best funds as per your suitable needs

Investment process

1. Define your Investment Objective

Before you start investing or look for building a portfolio, you need to assess the following three major factors:

Financial Goal — Capital Outlay — Risk Appetite.

Understanding your financial goals gives direction to the portfolio while Capital Outlay and Risk appetite play a primary role in deciding the kind of assets you can purchase for the portfolio.

This step provides a benchmark to be able to evaluate your portfolio’s performance.

You need to clearly define goals and quantify them so that the assessment can identify any gaps between your current investment strategy and the stated goals.

2. Building a suitable portfolio

Once you identify your objective and understand risk appetite, you now have the tools to build a good portfolio:

The key to successful investing is Diversification. That means investing in different types of investment options depending upon your risk-return balance. The basic four portfolio types that you can choose from are:

  • Aggressive portfolio–An investment strategy that includes assets, that give high risks and rewards.