How to Write a Simple Financial Investment Plan
- 1). Define your goals. Include retirement savings, purchases of large ticket items such as houses and automobiles, college for your children and any plans you may have to start a business. Estimate the amount of money you will need for these goals.
- 2). Determine your risk tolerance. If you are still under 40 years old, your ability to accumulate additional earnings allows you to invest in slightly riskier securities than if you are closer to your planned retirement age. Over 40, invest in high-quality, income-producing securities.
- 3). Select the investment instruments to use in keeping with your determined tolerance for risk. High-risk securities are speculative stock and mutual funds that are geared to producing profits, rather than income. Conservative investments include growth- and income-producing mutual funds, high-quality common and preferred stock, and bonds.
- 4). Set up an investment schedule. If you have a block of money from an inheritance or windfall, put it into a money market fund or bank certificate of deposit and move it gradually into the market. It is always best to set aside 10 percent of your monthly income for savings and investment purposes.
- 5). Establish benchmarks related to your ultimate investment goals. For example, if you are investing for retirement, monitor your investment progress by age benchmarks indicating how many years you have left to build your retirement fund. If you are behind your goal according to the benchmarks, you may have to reconsider your investment plan and take more risks. If you are ahead of goal, you may wish to move into more-conservative income investments.
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