Investment Planning is the act of matching your future financial objectives and goals with your available financial resources. Investment planning should be at the heart of every financial plan. If you do not put investment planning at the top of your financial priorities, you will inevitably fail in achieving your financial objectives. Without investment planning, it is virtually impossible to achieve any objective set forth in a financial plan. In the case of investing for retirement, the key to financial success is an investment strategy that will provide a comfortable nest egg for your later years. It can be difficult to come up with an investment strategy without proper knowledge of the markets.
Investment Planning involves the systematic development of a portfolio that will provide your future financial needs. Your assets, liabilities and future income from these assets are all considered when planning an investment strategy. There are three basic areas of consideration when planning an investment strategy. These include your personal objectives, your long-term goals, and your short-term and long-term investment objectives. The planning of investments should take into account the current market conditions, both economic and social, as well as your tolerance for risk.
When planning your investment plan, the first step is to determine your personal objectives. These can include attaining certain age milestones, paying off significant debts, buying a certain house or other major asset, or saving for a specific educational expense. Most people’s long-term goals include buying a yacht or purchasing a second home. These types of investments are typically more lucrative than most other long-term investments. It may be wise to diversify your investments by investing in different sectors and industries.
An investment planning process begins by determining your long-term and short-term goals. A complete investment plan includes all of your plans for investing for the future, as well as your projections of these goals. Your investment policy will help you make sense of the details of your investment plan by outlining how your decisions will affect your long-term and short-term goals. This includes what decisions you will make regarding your insurance policies, retirement accounts, mutual funds, stocks, bonds, insurance, and other financial portfolios. It can also include the details of your investment planning including what types of investments you will consider.
The next step of investment planning involves researching the marketplace to help you determine what products and services are currently popular, as well as trends that may suggest what products or services are likely to be popular in the future. This can include analyzing the makeup of retail stores, radio stations, television programs, movies, sporting events, musical groups, and theme parks among other items. Your research can also help you find the hottest trends in the real estate industry, the stock market, technology, and other relevant industries. After you have determined what your particular interests are, it is time to decide what type of investment vehicle and strategies you wish to use to achieve your goals. Your investment plan will help you invest your money in ways that will maximize your profits but will also keep you from taking large risks that could lead to significant losses.
Once you have all of your information together, it is time to put together an investment strategy. If you have already completed the research portion of your investment plan, your strategy should be fairly obvious. However, if you are new to investment planning, it may take a little extra work on your part to come up with an effective strategy. Some common investment strategies include: index funds, individual stock portfolios, safe savings accounts, venture capital funds, real estate investment, insurance strategies, and stock market strategies. All of these strategies can be effective for different investors, depending on their investment goals and current financial situation.