How To Create A Personalized Investment Plan

One advice I would give my younger self is investing, saving with well-set objective. I made that mistake while starting out, but I got it as time went by. I wish I had known much earlier. Because i had a concrete “why”, it helped me reach my financial goal of investing in myself (going back to school for a full time MBA program).

The best way to make the most of your investment options is to have a clearly defined goals. When this is in place, decision making become much easier. Remember it’s okay to have more than one objective, if this is the case portfolio diversification is the solution

Consider your goals

Let’s highlight some possible goals you can identify before you start investing:

Retirement
College education for kids
A major purchase
Generate income
Build wealth
Create a tax shelter

It’s important to state that your investment objective should be personal. It should hinge on your specific needs and financial situation. I can imagine you say “my needs are endless” I agree, my suggestion would be list them and go ahead to prioritize.

Identify your objective

Your investment objective can be :

To keep your funds safe and secure
To grow your fund
To earn a steady and additional source of income
To minimize income tax burden

investment objective plays a crucial part in determining the investment option that would enable you reach your goal. For instance, if your goal is to invest for retirement, your investment objective would most likely be to earn steady income UPON retirement. The best investment option might be to purchase shares of companies that are known to pay dividend regularly.

Determine your current financial status

Evaluating your financial situation gives you an idea of where you stand. What you own vs what you owe, your income in comparison with your expenses. By doing this, you’re able to determine how much can be set aside for investment without depriving yourself of your basic needs.

Determine your financial health by cumulating your asset/ income and subtract from total liability / expenses.

Ensure your investment strategy is aligned with your situation

Before you invest, you need to consider a few factors;

Do you have an emergency fund: While it’s great to invest, I strongly recommend you focus on building up at least six months worth of expense in an emergency fund and stick that in a savings account.

Your risk tolerance: If a decline in that investment option would cause you to lose sleep, then you might want to avoid investing 100% of your funds in that option

Your time horizon: Do you need the funds in the next 6 – 12 months it is recommended not to invest it in long term investment options like stocks that are highly volatile.

Summary

My recommendation is to identify the financial goals you want to achieve in the short and long term, write it down, and begin to take baby steps consistently to reach the mark.

We have a free guide that can help you create a personalized investment plan click here to download now

ABOUT THE AUTHOR

pfmAcademy is committed to helping young professionals become intentional about their finance through practical personal financial management tips.

Before I joined PFM Academy, I was just a classroom teacher and a lover of make-up. Like, if I were taken to a drugstore on a blank cheque, I will go for all the makeup items in that store. Then, one evening I had a 1-1 session with Tolu from PFM (we use to be church members during our childhood) and she asked how I was doing in my profession. I complained on how “Teachers take home, were unable to take them home here in Nigeria” she asked of my passion and encouraged that I could use that to start a ‘side blessing’ that’s what she tagged it. During the lock down I enrolled for a makeup course where I came out second best and boom! I began my side blessing after that. I makeup people for good money and yes, I still buy makeup products but this time, I buy for people and then make my profit. Thank you, Sis.