Building an Investment Plan

Let’s face it, we all want money in the bank and we dream of a day when we no longer have to worry about punching a time clock or busting our butts trading our time and energy for income. In order to get to that proverbial (and some may say, “mythical”) golden age of retirement, we’ve got to start putting away some of today’s resources to build a plan.

So, how do you build an investment plan? Well, you start out very basic and then incorporate more sophisticated and advanced tools. With that in mind, here are some very basic ideas with links to more sophisticated and advanced ideas.

Step 1 – Get Started

Get started is Step 1? Really? Shouldn’t you wait until you have a grand plan laid out first where you know where every nickel of your portfolio investment money is going to come from and how it will be allocated? Nope! That’s called “procrastination”. In order to build an investment portfolio, you’ve got to start – NOW! Don’t wait a minute longer.

Getting started means two things: Start saving and reduce debt. We’ll share with you strategies and ideas for this as we go. Be sure to bookmark this site and make it a point to check back often. New investment articles will be listed in the middle column of this page. As your Investment Portfolio grows, you’ll continue to find articles and tools you can use here to help it grow faster and safer.

Step 2 – Determine Where You’re At

Get out a single piece of paper and draw a line down the middle from top to bottom. On the left, list all your current assets – things like the amount of money in your checking and savings accounts, your 401K and other investment accounts, your college funds for the kids. (Depressed yet?) On the other side, list your debts.

When you total the dollar amounts up, which side of the list is larger? If you’re about equal – congratulations! You’ve got a great place to start. If you’re out of balance towards the “good side” – way to go! If you’re heavily weighted towards the “bad side” – well, you know you’ve got work to do and reading articles on this site will help you shift the weight towards the good side.

Step 3 – Set Your Goals

Start mapping out your future on paper. This is not one of those goal-setting “visualize yourself already possessing what it is you’re after and writing it on 3×5 cards to carry with you everywhere you go to recite out loud in a mirror to yourself 6 times a day” type of exercises. All we want you to do is start writing down things that you’ll need money for in the future. Here’s a couple to get you started:

• Will you be replacing a vehicle soon?
• How are your appliances doing – will you need to replace the fridge in the next few years?
• When do you need to replace the roof?
• What are your vacation plans?
• College tuition?
• Buying a house or vacation home?

Just start doodling down your goals and a rough timeline of when these things will happen.

Step 4 – Create 3 Buckets For Your Goals

Divide your list of goals onto 3 lists – or buckets. You should have a:

• Short-Term Bucket (things happening in the next year)
• Mid-Range Bucket (things happening in the next 2-5 years)
• Long-Term Bucket (more than 5 years away)

Here’s how you start the Short-Term Bucket list:

• 6 months of salary readily available
• Any major purchases coming up this year

This is how much you’ll need in your short-term bucket. Finish creating this bucket and try to do a decent dollar-amount job on the mid-range bucket. The long-term bucket really doesn’t have to be all that well defined as far as dollar amounts since the dollar amount you want in this one is “as much as possible”. But it is helpful to list those types of items you’ll need in the future, like your retirement fund and college tuition for the kids, just so you can see where you’re heading.

You Now Have A Plan!

That’s really all there is to financial planning. Pretty easy, huh? Now, the trick is to put together an investment portfolio that matches up with your financial plan. And once you see your financial plan broken down this way – the 3 buckets that you need to fill up with money – it makes choosing the right investments and allocating your resources properly much easier.

Time to set up an account, either with your local bank or an investment firm, and look for articles here that will help you create these investment vehicles and get you moving towards meeting your financial plan you’ve just created. Welcome to wealth creation!

Classic Investment Literature

The original and still the best book on investing, and the inspiration for a young Warren Buffet - first published in 1949, it has withstood every event since, and is even more important in today’s climate - Benjamin Graham thrived through the Great Depression and placed his philosophy and techniques on paper.	The stereotypical view of millionaires are those riding in limos, flashing their bling, and sailing on their yachts. Stanley proves this is not the case - the vast majority of those who become millionaires do so by investing and living modestly.	Poor dads live paycheck-to-paycheck. Rich dads live on the passive cash-flow of real estate, stocks, dividends and other investment vehicles, and do not rely on their single house or paycheck to get by. This book brilliantly explains how to become a “rich dad”.