How to do investment planning: Guide for Canadians

How to do investment planning
Article Overview

A primary reason for every investment is to have something sustainable to ultimately depend on in times of crisis or after retirement. It is never a good idea to spend all of your money as soon as it comes in. It’s a good idea to set aside and invest a portion of your income, no matter how small. Any financial experts in Canada will constantly advise you to invest your money in various portfolios in order to provide for yourself and your loved ones. To make a profitable investment, you’ll need a good investment strategy that will help you meet your financial and investment objectives.

If you’re thinking about starting to invest, it’s critical that you do so with a set of criteria in mind. You must have a strategy and stick to it. Otherwise, you’ll soon start to see your savings dwindle, rather than multiply. Today, we will discuss how to do investment planning.

How to do investment planning?

1. Examine your particular conditions

You should invest in a way that is acceptable for your age group. In general, if you’re young, you’ll have more recovery time if the market crashes. A good idea is that you allocate your investments to investment portfolios that are dynamic.

If you are close to retirement, it is best to invest in products that are not so dynamic.

2. Analyze your financial situation

You must be aware of how much money you have available to invest. Setting a budget to establish how much money you wish to invest is critical. Do not forget to leave a separate amount for any unforeseen emergency situation.

3. Reserve sufficient funds for current consumption

It is mainly reserved for customers for basic living expenses such as food, clothing, housing, transportation, entertainment, and medical care, and the remaining funds can be used for investment.

4. What is your risk profile?

The profile you have determines your risk tolerance. Even if you are young, it does not mean that you are willing to take many risks.

After all, you should remember that there always are. Also, the fewer risks there are in a product, the lower the profits. Investors who take a lot of risks tend to make more money (although they can also lose significant amounts).

3. Decide on your goals.

What do you intend to do with the funds? Are you interested in pursuing a master’s degree? Or do you want to purchase a house? These are some of the questions you’ll ask yourself before making a financial investment decision.

No matter what your aim is, it’s always a good idea to diversify your investment portfolio. The aim is to let the investment grow over a long period of time so that you have sufficient money to cover your goal expenses.

4. Set a date for your goals

If you are interested in quickly making a big profit on the investment you are making, and are also prepared to take the risk that you could suffer a big loss, then you can choose the most dynamic investments that have the potential to generate significant profits.

On the other hand, if you are interested in earning money slowly, the best investments to choose are those that generate along-term return.

5. What degree of liquidity do you require?

A liquid asset is one that can be readily and rapidly transformed into money. So, whether you have an emergency, you can easily get money quickly.

For example, stocks or funds are highly liquid assets because they can be converted to cash in a matter of days.

Real estate, on the other hand, is not very liquid. It might take weeks or even months to turn them into money.

6. Choosing the right investment vehicle

This step is mainly to choose to collect further investment information and to select investment tools that are consistent with the investment objectives. The best investment tool is not necessarily the one with the greatest return, and other factors such as risk and tax considerations may have a greater impact. For example, if a customer wants to get the maximum dividend income, theoretically, he should buy stocks with high dividends, but if the company that issued the stock is more likely to go bankrupt, and once the company goes bankrupt, the customer will lose all investment, then this It is wiser to advise clients to buy stocks in companies that pay relatively lesser dividends but are less likely to go bankrupt.

Careful selection of investment vehicles is the key to investment success. The selection of investment vehicles should be consistent with investment objectives and should consider the balance of investment returns, risks, and value.

7. Decide how you want to diversify

It is recommended not to put all the money in the same basket. It is better to diversify. In this way, if an investment is suffering losses, the money can be recovered with another that is offering profits.

8. The plan must be in accordance with your risk profile

Bear in mind that if you invest 90percent of your money into stocks every single month, you risk losing a lot of money if the market falls drastically. As a result, you must ensure that it is a risk you are willing to take. Otherwise, don’t do it.

How do I make an investment plan?

All you need to do is go through the process discussed earlier and implement them accordingly. However, if you are not entirely sure how you can make your plan according to your objectives and your level of risk tolerance, it is best to contact a financial advisor for advice.

Important of making investment planning

  1. Errors are reduced. Decisions are thought of more with the head than being carried away by hunches.
  2. There are fewer risks. In line with the previous point. By analyzing investments more, risks are reduced, although there will always be risks.
  3. It can be measured and changed. Another advantage of having an investment plan. From time to time, you can analyze the results to see what is done wrong or right and adjust it.

How to evaluate the progress of your investments in your investment plan

Every investment plan needs to be controlled and evaluated. That is why it is essential that you evaluate how the progress of your investments is going to see if the plan needs some tweaking to improve.

Check your investments on a regular basis. Analyze if they are developed according to your objectives. If they don’t, reassess your investments and determine where you need to make changes.

  • Determine whether you need to alter your risk profile. You become less inclined to take chances as you become older.
  • Assess whether you are contributing enough to reach your financial goals. It may be the case that you do not allocate enough money from each salary to your investments to achieve the goals you set for yourself. Otherwise, you can get too far gone and end up spending more money than necessary. What is essential is that you adapt your contributions accordingly.

What are the best investment strategies?

Each investment strategy has its advantages and disadvantages depending on the investment profile of each person, the time horizon, and their financial objectives. Therefore, each investor must choose the one (or those) with which he feels most comfortable investing. Some of the best-known investment strategies are the following:

  • Direct investment in shares(the investor invests in the companies that he or she believes to be the most profitable).
  • Value investing or investment in value (consists of investing in firms that are undervalued).
  • Investment in companies that distribute dividends among their shareholders (the objective, in this case, is to ensure regular income).
  • Growth investment or growth (it is invested in companies that are expected to grow above the market).
  • Momentum (the values ​​that rise faster at each moment are bought).

All these strategies can become very interesting depending on what type of person. For example, an investor who will need their money in the short term might opt ​​for Value, while another with a longer time horizon might prefer Growth investing.

6 basic tips for any investment

1. Find out well before starting any investment. 

The information gives you the power to know the sectors that best suit your investor profile.

2. Set clear goals.

The risk you are willing to take, the purpose of the investment, and the time you are willing to wait to obtain benefits will help you choose the path you want.

3. Decide how much you are willing to invest.

Analyze the state of your personal finances. You can pick what sorts of investments are best for you based on how they are. You don’t have to forget that you won’t be able to enjoy that money for a time. That is why having patience is essential and that, in addition, the benefits may take time to arrive.

4. Diversify your investments. 

It is something that we have already commented on throughout the article, but we repeat it again because it is something very important. If you put all your money into a single product, you run the risk of losing everything due to a bad operation. Better to diversify to correct possible losses.

5. Choose the products that suit your investor profile. 

There are many options whereto invest. Analyze them well and stay with the one that suits you best taking into account the risk, your objective, and the time in which you want to achieve it.

6. Investment in your education is one of the best investments you can make.

Learning to invest is a very good tool that you can have at your fingertips so that your investments can be a success.


To create an investment plan, you should first figure out your financial goals, how much risk you are willing to take, and how long you have to invest. Then, you can select suitable investment options and diversify your portfolio. Finally, regularly review and adjust your plan as needed.

The 4 investment strategies are growth, value, income, and index investing. Growth investing focuses on stocks with high growth potential; value investing on undervalued stocks; income investing on stocks that pay out consistent dividends; and index investing on stocks that track market indexes.

As a beginner who is starting to invest, start by learning about different investment options, creating a budget, and setting investment goals. Consider speaking with a financial advisor and set up a monthly contribution, preferably in a TFSA. Start small, diversify, and stay patient for long-term gains.

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Written by:

Jim Pan, CFP, MFA-P

Jim is a dedicated, fee and advice only independent Certified Financial Planner with a focus on supporting healthcare business owners during their crucial growth phase. His expertise lies in offering comprehensive solutions to minimize taxes while embracing a holistic approach. With a career spanning back to 2010, Jim has established a strong presence in the financial industry. He proudly holds a range of designations, including Certified Financial Planner (CFP), and Master Financial Advisor - Philanthropy (MFA-P). He is currently pursuing additional designations and qualifications to better serve his clients and community. Beyond his qualifications, Jim is a member and an esteemed participant in the Million Dollar Round Table (MDRT), an exclusive global association comprising the top 1% of financial advisors. Jim's commitment extends to the community, where he spearheads numerous charitable fundraising events and plays an active role in enhancing the well-being of others. Additionally, he has contributed significantly by serving on the board of the Canadian Mental Health Association in Vancouver. Currently, he volunteers with Junior Achievement of British Columbia (JABC) to present personal finance topics to youths.

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