Do you have an investment plan? According to the latest research, more than half of today’s young adults are investing their money and report feeling confident about their financial future. Are you one of them? 

If not, it’s never too late to create an investment plan. Older adults can also benefit from thoughtful financial planning. 

In this post, we’ll show you how to make an investment plan. We’ll even show you an example of what a typical plan might look like!

making investment plan

What is an Investment Plan?

First of all, what is an investment plan? There’s no one-size-fits all definition of an investment plan, but generally speaking, investment planning helps you to map out your financial future. 

Investment plans can help you take stock of your current assets and develop action steps to meet short-term or long-term financial goals.

Why Make an Investment Plan?

If you haven’t made an investment plan, there’s never been a better time than now. Having a plan for your future can help you meet major life goals, such as:

  • Paying off debt
  • Buying a home
  • Savings for marriage/family
  • Paying for children’s education
  • Retirement

These financial goals won’t happen overnight. Creating a realistic, achievable investment plan can ensure that your future is secure, allowing you to be confident in the decisions you make today.

making investment plan toy house

How to Make an Investment Plan

Formulating an investment plan may sound daunting, but it doesn’t have to be complicated. Here are some of the questions you’ll need to ask when you’re creating your investment plan.

What Are Your Current Assets?

What is your present financial situation? If you haven’t already made a monthly budget, now’s the time. 

Your budget should include your monthly net income, as well as your regular debts and other expenses. The money you have left over can then be used for investment. 

Don’t sweat it if it’s not a lot. The goal here is to accumulate money over time. You can always increase your monthly investment as your finances improve or as you begin to pay off debts.

What Are Your Goals?

What are your financial goals? Some goals can be short-term, such as buying a house. Other goals are long-term, such as planning for retirement. 

These goals will determine your investment timeline. For short-term goals, you’ll want to watch for opportunities that provide quick growth, as well as the ability to liquidate the investment at the appropriate time.

What is Your Risk Tolerance?

How do you feel about risky investments? Young people are increasingly willing to make riskier investments, and it’s been paying off in a big way. 

When you’re young, you’ll have plenty of time to recoup a loss if your stock pick doesn’t perform favorably.

That doesn’t mean that you should only invest in high-risk stocks, of course. Higher risk is appropriate for long-term financial investments, but short-term goals can be more safely managed through more stable investments, such as real estate.

You can always balance high-risk stocks with stable stock picks by diversifying your portfolio. 

When you keep a diverse portfolio, you can achieve the benefits of high-performing stocks while maintaining the stability of low-risk stocks. 

You can even invest in an index fund, which is a type of fund that tries to match the performance of a market index (e.g., the Dow or S&P 500), rather than trying to select stocks to beat the market.

What Do You Want to Invest In?

Next, you’ll want to decide which financial vehicle to invest in. This task can be daunting, given the number of available options. A great place to start is to talk to your employer. Some companies offer 401(k) plans, IRAs, and other investment vehicles. Some will even match your retirement contributions.

Other financial vehicles can be used for short-term purposes. Savings accounts and CDs can provide a limited amount of interest, but the money can be retrieved much more easily than a mutual fund or IRA. 

A 529 plan can allow you to save for your child’s education, and it offers some tax benefits, as well. You might also consider investing in physical items such as real estate, property, art, or other high-value items.

Of course, if you ever find yourself a little lost, there’s no harm in talking to a financial advisor, who can offer insight into the best ways to invest your money based on your current goals.

How Will You Monitor Your Investments?

Finally, you’ll need to have a clear strategy for monitoring your investments. You should check your investments at least once a month to determine if they are growing. If they are not, you might need to re-evaluate your investments. You may discover that you need to put more money into a particular stock or jettison under-performing stocks to prevent loss.

You’ll want to revisit this investment planning procedure every 5 years to re-evaluate your financial assets and goals. You may find that your goals change or that you have more disposable income, which may change the amount or types of investment you choose to make.

A Personal Investment Plan Example

Let’s take a look at a hypothetical scenario. Beth is in her early 20s and hopes to buy a house in the next 10 years. She goes through the questions above and discovers that she’s able to invest $250 per month. She chooses to invest in the stock market, building a balanced portfolio that grows over time. 

Beth gets lucky and her investment grows over time. She relies on the latest software to monitor her investments. 10 years later, she’s able to make a $50,000 down payment on her dream home.

There are no guarantees of success, but building a plan like Beth could help you achieve your own dreams. Why not start today?

man making investment plan

Make a Plan with Gorilla Trades

Gorilla Trades helps individuals to achieve their financial goals by providing the education and resources they need to succeed in the world of investing. 

Our members gain access to stock picks, newsletters, and other tools to help them maximize their investments. 

Sign up today for our risk-free, 30-day trial. You’ll be better equipped to make a solid plan, while monitoring the ways that your plan moves you toward your goals!