Investment planning is basically a process to achieve financial goals with your investment resources. In simple words Personal investment plan is understanding where you want to be financially and figuring out what it will take to reach there. In finance terms investment plan is also known as investment policy statement. Proper investment plans will allow the investors’ money to produce financial gains over time.

A good structured investment plan is a straight road to financial success. If you don’t have a plan than you don’t have any guidelines for you investment actions and this could lead to financial and emotional stress.

Investment plan is important because it help you as an investor to get maximum profit from your investment; but your success will depend upon your ability to choose the right type of investment. Good investment plan also help reduce portfolio risk and improve return. Investment plan states what you will invest in, how you will invest, why you will invest, what percentage of your money you will invest and many more, this in turn will significantly affect your investment returns.

When you make/write a personal investment plan be sure to follow it carefully if you want to achieve your investment objectives with in the set time frame.

• You should start investing at an early stage of life so that you can earn more income. When you start early there will be more time for your investments to grow and be successful by the time you will need the returns.

• Make a plan before you start to invest. There is a peace of mind when you have a plan set. Think about your objectives when making a plan. Your objectives can be saving for retirement purposes, children’s future, or saving for a house etc. Once you figure out your investment objectives your plan should focus on achieving your objectives.

• Figure out the amount of money you will need, when you will need it and how much investment risks you can take.

• Make/plan a time frame which will help you achieve your investment objectives.

• Invest often- you can invest small amounts regularly rather than large ones once a year or every few years. Small regular investments or regular savings can be financially beneficial.

• It is best option to stay invested for long term, as long term investments are more beneficial (higher returns) whereby you will benefit from higher long term interest rates, long term market trends and growth.

• You should learn effective ways to manage investment risks when investing. The best way to overcome the investment risks is by investing in many different types of investments such as bonds, stocks, cash and money market investments, rather than just investing in one investment class. In this way there are fewer chances of you losing out on your money if one investment fails.

• Diversify your portfolio by combining a range of investments. This will help reduce the overall risk of investment.

• You can also invest internationally. This will help you manage the investment risks through greater diversification and may provide opportunities for growth of your long term return.  One of the best ways to invest internationally is by investing in mutual funds in international securities.

• It represents the investors- it explains investors personal investment characteristics(risk tolerance, personal constraints and targets)

• The plan clearly states what the investor will and will not invest in and how they will invest. It also includes the investment guidelines that will help you ensure achieving your goals.

• Investment plans provide investment framework and guidelines which help the investors make wise investment choices by reasoning through the decisions that may have major impact on the investment returns.