Why Having an Investment Plan is Important

What is Investment Planning?

Investment planning is a critical part of the financial planning process, where one identifies specific financial plans and puts together a strategy for achieving them. Investments are chosen based on your investment risk tolerance and time horizon. There are various investment options in the form of cash, bonds, securities, annuities, and even real estate. Based on the funds available, one can utilize these financial tools to reach their desired investment goals and objectives. In other words, an investment plan can help you create a strategy that can increase your assets and help secure your future and that of your loved ones.

The Importance of Investment Planning

‍Investment planning is about ensuring your future and to do that, you need to know where your current financial situation stands. By evaluating your current financial situation, you will get an idea of what you have to kick-start your investment plan. This can also help you structure your income and expenses to make room for investment capital. This step can give you a clear picture of where you are financially, as well as help you identify your desired financial lifestyle in retirement planning.

Identifying your financial goals and objectives is important because it will help determine how you should structure your investments as it relates to your portfolio. After assessing your current financial situation, set a financial target for yourself in the short term as well as the long term. This can enable you to identify the best financial strategy to adopt that may grow your assets to meet your financial target. When outlining your financial goals, some things to consider include your post-retirement lifestyles, real estate goals, streams of income, and whether you want to create generational wealth for your loved ones.

Investment Planning Through Different Life Stages

Investment planning is not a one-size-fits-all process; it evolves as you move through life’s different stages:

  • Early Career: Focus on growth-oriented investments and start retirement planning early to leverage compound interest.
  • Mid-Career: Balance between growth and stability, with increased attention to retirement savings and family expenses.
  • Late Career: Shift towards capital preservation and income generation as retirement nears, reducing exposure to high-risk investments. Consider incorporating life insurance into your financial plan for additional security.
  • Retirement: Prioritize income generation and capital preservation to ensure your savings support you throughout retirement.


Adapting your investment strategy to your life stage ensures financial security and goal achievement at every turn.

We often hear that the higher the risk, the higher the reward. Investing is all about risk, and as you know, nothing is ever guaranteed. Low-risk investments usually have lower returns, so you will want to decide your risk tolerance for your investment profile. Most financial advisors will recommend that you spread your investments across different portfolios to combine both low-risk and high-risk investments in order to  achieve a balance in your overall portfolio. Your financial goals should also determine how aggressive your investment portfolios should be. The key is to set realistic goals for yourself, using your current financial capabilities. You can always review your investment plan when your financial situation changes. The more income you have, the more you can afford to invest. Your retirement age will also determine your risk tolerance. For those aiming to retire at a younger age, depending on how old you are and how much you currently earn, you may have to invest more aggressively to be able to sustain the post-retirement lifestyle you desire.

Types of Investments

‍One of the most impactful steps to reaching your financial goal is the type of investments you select for your portfolio. The scope of investment portfolios you can choose from is wide, depending on your financial goals and your level of income. This is where the help of a financial advisor can be crucial to the success of your overall picture. A financial advisor can also guide you through the impact that taxes could have on your desired rates of return. Some of the more common types of investments vehicles used are:


This type of investment gives you a stake in the ownership of any available public company. You can earn dividends on those shares, and have the option of simply selling your stakes when it has appreciated over a set period.  Although never a guarantee, the stock market has historically been known to average a 10% rate of return annually1. These returns can reflect the potential value of appreciation for the number of shares you own.

‍Investment Funds‍ (Mutual Funds, Index Funds, and Exchange Traded Funds):

These are known as a basket of stocks managed by a designated fund manager. The most commonly used are Mutual Funds. This option is a good choice for an investor that does not have the time or capability of making the investment decisions themselves. A known disadvantage is the commission that is paid to the fund managers, which in turn may affect your overall rate of return. On the other hand, Index Funds and Exchange Rate Funds are some of the more cost-effective ways to participate in the market. These funds tend to take a more passive investment management approach.


Bonds are like loans to the government or individual companies in exchange for returns over a set period. Short-term bonds tend to have a more modest return of 2% to 3% while longer-term bonds return an average of 5% to 6% annually2. For those planning to retire at a young age, this may not be the best option. Transversely, bonds are a very important aspect of a well-balanced portfolio and can help reduce the volatile swings of the stock market.


Annuities are usually referred to as the supplemental income vehicle for retirees. It is a contract between an investor and an insurance company whereby the investor usually pays a lump sum in exchange for periodic payments to the investor in retirement. In the past, annuities have been stigmatized for locking investors in high commission paying contracts that ended up being harmful to their overall picture. Today, with newer regulations in place and the overall direction of the industry, these investment options can play a really important role for those who want a guaranteed income stream in the future.

Systematic Investment Plan:

A systematic investment plan is a way in which investors make regular, equal payments into a mutual fund, trading account, or retirement account such as a 401(k). This can be a great tool for new investors who may not yet have the discipline to save for their future. Systematic investment plans allow investors to save regularly with a smaller amount of money while benefiting from the long-term advantages of dollar-cost averaging. By using a dollar-cost-averaging strategy, an investor can make periodic equal transfers of funds to help build wealth.

There are numerous questions and many issues to take into consideration when coming up with an investment plan. You should provide full disclosure of your financial assets, expected income streams, and obligations, especially as they affect the portfolio under management. Whether you’re looking for investment firms in Houston or a San Ramon investment manager, a financial advisor can work with you to answer these questions. Your advisor will use your answers to develop a written investment plan. Together, you should be able to determine a target rate of return and an appropriate mix of assets to place in your portfolio. Regular feedback will enable your advisor to incorporate any changes in your needs or circumstances as they occur.

Written by,

Andre Paiva, CRPC®

Andre Paiva, CRPC®

Andre joined Insight Wealth Strategies in 2018 and works as an Associate Advisor on our Advisory team creating financial plans and implementing investment management strategies for our clients. He holds a Bachelor’s degree in Business Management from University of Phoenix, he has previously passed his Series 7 and 66 licenses as well as CA life and health insurance, and is a notary public.

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Insight Wealth Strategies, LLC is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Insight Wealth Strategies, LLC and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Insight Wealth Strategies, LLC unless a client service agreement is in place.

Insight Wealth Strategies, LLC (IWS) and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.