How to create an Individual Investment Plan

“Financially Fit” is a column published by RCB Bank to help you gain knowledge on all things financial.

By: Joe Langley | Category: Financial Services | Issue: June 2015

RCB Bank Trust Officers Terry Parsons, CFP®, Joe Langley, CFP®, and Travis Colson.

RCB Bank Trust Officers Terry Parsons, CFP®, Joe Langley, CFP®, and Travis Colson.

Creating an investment plan will help you reach your financial goals. Without one, you could be leaving your future and retirement to chance.

You may want to speak with an investment professional who can walk you through your goals and help determine how much money and time is needed to get there. Look for a qualified professional who will help you make sound investment decisions and keep you informed about the economy and financial markets that may affect your investment portfolio.

Step 1: Set specific goal(s).Without a clear understanding of what you want, you’ll never know how to get there or how much it costs. Write down your goal(s) and make them very specific.

Do you want to:
•  Buy a vacation home
•  Take a cruise
•  Retire early and comfortably
•  Give money to charities
•  Pay for college

Step 2: Calculate the cost.
How much money do you need to reach your goal? An investment professional can help you calculate costs and determine if your goals are realistic and attainable?

Step 3: Determine your timeframe. How much time do you have to achieve your goal? One year, five years, more than 10? In the investment world, timeframes are broken into terms:
•  Short-term - 0 to 5 years to complete
•  Medium-term – 5 to 10 years to complete
•  Long-term - Longer than 10 years to complete

Step 4: Determine your risk tolerance. There is a direct correlation between the investments you choose and the length of time you have to meet your goal. Generally, you may choose higher risk investments like stocks or growth assets if you have a longer time to reach your goal. Higher risk investments offer the possibility of bigger gains but are considered more volatile. For short-term goals, you may pick less risky investments like bonds or income-producing assets that offer a lower but more predictable return on your money. Your risk tolerance should be based on your comfort level.

Step 5: Choose how much money to invest. How much money can you comfortably invest toward your goal? Can you invest all of the funds needed at once? Do you need to invest over a period of years to reach your goals? Choosing to invest over a period of years requires discipline and consistency with your contributions.

Step 6: Select investments.This is where an investment professional or financial advisor can help as this step can be overwhelming.

Step 7: Monitor progress.Periodically check the progress of your investments. Are you on track? Have you had a change in your situation? There are a number of factors that may require an adjustment to your investment plan. Revisiting your plan regularly will help you reach your goal.
While there is a plethora of online tools available to help with the planning, purchasing and monitoring of your investment plan, it is always worth the time to sit down with a professional. No matter your goals or income level, they can help you get the best bang for your buck.
Opinions expressed above are the personal opinions of RCB Bank Trust officer Joe Langley, CFP®, VP Client Development, and meant for generic illustration purposes only.

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