Making an Investment Plan: A Step-by-Step Guide

Creating an investment plan can be a critical step while working to create long-term financial security and on the path to achieving retirement goals. It’s not just about picking stocks – it’s about understanding your current financial situation, defining your future objectives, and determining the level of risk you’re comfortable with.

Assess and Allocate

Begin by assessing your financial situation to determine how much you can invest. This involves evaluating your monthly disposable income and considering the liquidity of your investments.

Next, define your financial goals and timelines, which will help you decide whether to focus on safety, income or growth. Your goals will guide your investment choices and strategies.

Risk Tolerance and Time Horizon

Understanding your risk tolerance is crucial. Younger investors may be able to afford to take on more risk, while those closer to retirement should consider more conservative investments.

Your time horizon, often linked to retirement, will influence your asset allocation. Utilize tools like asset allocation calculators to help you distribute your investments across different asset classes effectively.

Choose Your Investments

Deciding how and where to invest is the next step. Your individual investments may include stocks, bonds, mutual funds, ETFs and more. You can spread these across retirement accounts like 401(k)s and IRAs, taxable brokerage accounts and education savings plans.

Maintain and Rebalance

Investing is an ongoing process. Regularly monitor your investments to ensure they align with your goals and risk profile. Rebalancing your portfolio can be necessary to maintain your desired asset allocation, especially after significant market changes. This may involve shifting funds from overperforming assets to others to maintain your investment strategy.

Investment planning is a dynamic process that requires regular attention and adjustment. Some key takeaways that can help ensure your plan stays on track include:

Regularly review your financial situation and adjust your investments accordingly.

Stay true to your defined financial goals and risk tolerance.

Consider diversifying with different assets and account types.

Ready to discuss an investment plan? Let’s start with your goals and risk tolerance. Contact me or book a session to get started.