5 Steps To Create An Investment Plan 


Investing is a popular way to generate wealth, but every investor has a unique portfolio with distinct financial goals. Building an effective portfolio requires a well-thought-out plan.

Without one, it’s easy to get lost and make decisions that may not align with your objectives. Therefore, having an investment plan is crucial, especially when you need to make tough decisions about adding or dropping investments. 

Creating a comprehensive plan for your short-, medium-, and long-term financial goals. While you could make one on your own, seeking the guidance of a financial planner is highly recommended to ensure your investment strategy is aligned with your financial objectives.

Here are the steps you should take to create an investment plan.  

1. Evaluate Your Finances  

The first step in creating an investment plan is understanding your financial standing. Determining your current income, expense, and saving would be best. Then you can start developing an investment plan.  

Starting small is a viable option when it comes to investing. The amount of cash invested does not necessarily impact success. Many successful businesses began with small investments. The key is to invest in the right vehicles that align with your financial goals.

For example, buying retail properties for sale in Edmonton may not be feasible if you’re low on cash. However, if you want to enter the real estate market, exchange-traded funds (ETFs) may be ideal. Alternatively, if you want to rent out your property, you may hire a property manager with affordable rates.   

If you’re a novice investor, you must evaluate your finances as soon as possible to start investing as soon as possible. Then determine how much of your income you will put toward building an investment portfolio. Also, create a budget to help you allocate your finances.  

2. Research Options  

The next step would be deciding what you want to invest in. If you’ve done some research, you will find several options. However, your options would depend on your budget, financial goals, risk tolerance, and investment preferences. Remember all those factors when researching to ensure everything aligns with your portfolio.  

The assets you add to your portfolio should help you to reach your goals. Whatever your investment profile looks like, make sure it’s diversified. Diversification entails investing in assets under different classes with unique risk profiles. Portfolio diversification is important because it helps to spread risk.

You may invest in stocks, bonds, real estate, mutual funds, cryptocurrency, real estate investment trusts (REITs), savings accounts, and 401(k)s. Consider adding alternative investments in precious metals like gold or silver. If you’re wondering, are gold coins a good investment? It depends on what type of investor you are and what you want to achieve. But you can research further to find out more.    

3. Set Goals 

The next step is to define your financial goals. If you’re going to create an effective investment plan, you need to know what you want to achieve. Setting goals is crucial because it gives you something to aim for. Goals are essential to provide you with direction as an investor. Consequently, they make decision-making more manageable.  

An easy way to approach goal setting is to be SMART: 

  • Specific: Goals should be clear and free of ambiguities. For example, if you’re building retirement savings, determine you want to build USD$1 million by the time you hit 60.
  • Measurable: You must have a standard for determining success or failure. So you must assign relevant metrics to your goals. 
  • Achievable: Set goals you are willing to pursue and know you can achieve with available time and resources.  
  • Realistic: Consider the personal, financial, and socioeconomic realities influencing your goals. For example, you should consider your income status when setting goals because it directly affects how much you can save.   
  • Time-bound: Specify the date or time you intend to achieve your goals.  Determine how quickly you want to earn specific money from your investments.

Before you set out to create an investment plan, determine your reasons and goals for investing. Whatever the case, knowing this will help you devise an appropriate investment portfolio.  

4. Understand Risks  

Every investor needs to understand their risk tolerance. This necessitates you know where you lie on the risk spectrum. It would be best to build an investment portfolio that matches your risk tolerance. So if you’re a risk-averse individual, go for safer investments like stocks and bonds. But if you have a higher risk tolerance, investments like futures and options may be an option for you.  

It’s also vital that you understand the risk profiles of your investments. Every investment has a certain risk profile. You don’t want to invest in assets that don’t align with your risk tolerance. Risky assets like cryptocurrency may have higher returns.  But it’s not always a guarantee. That’s why it’s best to leave this to expert investors who understand how those markets work

Riskier investments can yield higher returns, but you must weigh all the pros and cons of investing in any risky asset lest you regret the outcomes.  

5. Monitor And Rebalance  

You must constantly monitor your investment portfolio. Monitoring is important because that’s the only way to keep track of changes and the performance of your portfolio. Even if you have relatively stable assets like real estate in your portfolio, you still need to monitor their performance regularly.  

There are several reasons why you may need to restructure your portfolio. Here are some scenarios to consider. 

  • When you want to add or remove assets based on performance
  • When you want to diversify your portfolio
  • When your financial goals have changed
  • When the risk profile for one of the changes in your investment

These scenarios may necessitate you restructure your portfolio.  

Rebalancing ensures that your portfolio maintains the intended asset allocation. Your asset allocation defines the composition of your investment portfolio. You should rebalance your portfolio based on the performance of each asset. If stocks performed well, selling some of them makes sense, then reinvesting in other properties in your portfolio.   


Having an investment plan is important if you’re going to be a successful investor. It would be best if you had a plan to guide your decisions. Establishing a solid investment plan requires you to conduct thorough research. Moreover, your risk tolerance, financial goals, and investment preferences should define your investment plan.  

No two investors are the same. Portfolio structures and compositions will differ between investors. That’s why investment plans must be tailored. Although you could develop a plan individually, it’s wise to engage a financial planner to help you create a tailored plan.   

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